Sixth Circuit rules Ohio and Tennessee can apply gambling law to Kalshi
Victoria Shinder2 min readThe US Court of Appeals for the Sixth Circuit ruled on 25 September that Ohio and Tennessee may apply their sports-gambling laws to Kalshi's sports-event contracts. The published opinion, written by Judge Julia Smith Gibbons for a panel that also included Judges Clay and Bloomekatz, decided two consolidated appeals in which the district courts had reached opposite results.
Kalshi operates a designated contract market regulated by the Commodity Futures Trading Commission and began offering sports-event contracts in early 2025. After the Ohio Casino Control Commission and the Tennessee Sports Wagering Council signalled enforcement, Kalshi sued in both states, arguing that the Commodity Exchange Act gives the CFTC exclusive jurisdiction over swaps on regulated exchanges and so preempts state gambling law. A federal court in Ohio denied Kalshi a preliminary injunction; a federal court in Tennessee granted one.
The appeals court sided with the states on both questions. It held that Kalshi had not shown its sports-event contracts meet the statutory definition of a swap, so they do not fall within the CFTC's exclusive jurisdiction. And it held, in the alternative, that even if they were swaps, the Act neither expressly nor impliedly preempts Ohio's or Tennessee's gambling laws. It affirmed the Ohio denial, vacated the Tennessee injunction and sent both cases back for further proceedings. The CFTC was among the parties that filed as amici, as were several states, tribal governments and advocacy groups.
What it means
The ruling is about preliminary injunctions, so the cases continue, but a published appellate opinion on both the swap definition and preemption is a significant precedent for every prediction market that relies on federal registration to operate across state lines. States that treat sports contracts as gambling now have circuit-level backing in Ohio, Tennessee, Kentucky and Michigan.
The issue matters to crypto for a simple reason: several on-chain and crypto-adjacent platforms have built event markets on the same argument that federal derivatives law displaces state gambling law. Commentators already expect the dispute may reach the Supreme Court; until then, the answer depends on which circuit a user is in.