Appeals court allows Ohio and Tennessee to regulate Kalshi

A unanimous three-judge panel of the U.S. Court of Appeals for the Sixth Circuit ruled September 25 that Ohio and Tennessee may enforce their gambling laws against Kalshi’s sports-event contracts, rejecting the company’s claim that federal law shields the products from state regulation. The panel said Kalshi had not shown that its sports-event contracts meet the statutory definition of swaps subject to the Commodity Futures Trading Commission’s exclusive jurisdiction. It also concluded that, even if the contracts were swaps, the Commodity Exchange Act did not expressly or implicitly preempt Ohio’s or Tennessee’s gambling laws. The decision reverses a Tennessee federal court ruling that had favored Kalshi and leaves in place an Ohio federal court decision denying the company’s request to block state action. Kalshi had sought injunctions to prevent regulators in both states from pursuing claims against it. The ruling adds to a growing dispute over whether prediction-market contracts tied to sports and other events fall under state gambling laws or federal commodities regulation.