Sixth Circuit Turns Kalshi’s Own Words Against It in Two-State Loss

Previous Legal Arguments Damage Kalshi’s Case

A three-judge panel of the U.S. Court of Appeals for the Sixth Circuit ruled unanimously against Kalshi in two consolidated cases. It upheld an Ohio federal judge’s refusal to block the state’s Casino Control Commission and threw out an order that had shielded Kalshi from Tennessee’s sports wagering officials. Both cases go back to the district courts. Judge Julia Smith Gibbons wrote the opinion, and Judges Eric Clay and Rachel Bloomekatz joined it.

Per the court, Kalshi had not shown that its sports contracts are swaps, which are a kind of derivative the Commodity Futures Trading Commission (CFTC) claims exclusive jurisdiction over. To qualify, the court held, the underlying event must be “inherently associated” with a financial consequence, such as a change in interest rates. Sports results have “only downstream economic consequences, assuming they have the potential to cause economic consequences at all,” Gibbons wrote. Even if the contracts were swaps, federal law would not override the two states’ gambling laws, the judges wrote.

The panel also tested Kalshi’s broader reading at oral argument. The judges asked how contracts on the number of corner kicks in a game, or on whether an announcer says a particular word, could carry financial consequences. According to the opinion, Kalshi conceded that to a “layperson” it might be “hard to see how certain of these contracts have economic consequences,” while cautioning the court that sports is a “huge business.”

The court was not persuaded. If a layperson cannot discern the economic consequence, then it wrote, “It would be a stretch to say such a contract is ‘associated’ with potential economic consequences.”

The opinion also said Kalshi “has agreed with this conclusion in past litigation.” It quoted earlier concessions, recounted in a 2025 Nevada federal court decision, that the prediction market platform’s sports-event contracts have “no inherent economic significance” and “carry no economic risks.” The court also turned to a promise from Kalshi’s own lawyers. At the Tennessee hearing, they said the exchange would not list a contract on the color of the Gatorade shower at the Super Bowl. Kalshi’s reading of the law would cover exactly that contract, the judges wrote, since a broadcast yellow shower could plausibly lift sales of that flavor.

Other old legal arguments also damaged Kalshi’s case here. The first was a fallback argument that the CFTC’s exclusive jurisdiction covers any agreement traded on its exchange. The court noted that Kalshi “previously took the same position as we do here” in earlier cases in Nevada, New Jersey and Maryland. The second was the argument that federal law occupies the entire field of exchange trading. There, the court cited Kalshi’s own rulebook, which says user lawsuits against the exchange are governed by New York law, as evidence that state law already reaches trades on the platform.

The opinion also sized up the business at stake, describing Kalshi’s parlay contracts as ones “of which it offers billions of dollars’ worth per month.” It rejected Kalshi’s claim that complying with state-by-state rules was impossible. Geofencing may be costly, the court said, but “expensive does not mean impossible.”

Kalshi Pushes Back

“The law does not require a swap to involve ‘intrinsic’ financial consequences—and even if it did, sports clearly do,” Kalshi spokesperson Dani Lever told Courthouse News, adding that the ruling “shows exactly why a state-by-state patchwork doesn’t work.” Tennessee Attorney General Jonathan Skrmetti called it “a great win for Tennessee.”

“Sports wagering is heavily regulated because it can do a lot of harm, and I’m glad we thwarted Kalshi’s efforts to remove every safeguard and put Tennessee sports bettors at risk,” Skrmetti said. The Ohio attorney general’s office did not respond to Courthouse News.

The Sixth Circuit joins the Ninth, which ruled against Kalshi in Nevada on Aug. 28 and also quoted the company’s earlier concessions back at it. The Third Circuit sided with Kalshi in New Jersey in April, and an appeal over Maryland is still pending in the Fourth Circuit. New Jersey asked the Supreme Court to take up the split on Sept. 2. Kalshi’s response was originally due Oct. 8 but the deadline was extended on Sept. 22, and the response is now due Nov. 9.

The ruling comes at the preliminary-injunction stage. It does not order Kalshi to stop offering any contracts, but it leaves both states free to enforce their laws while the cases continue. Ohio’s regulator proposed a $5 million fine against Kalshi in April for offering sports gaming without a license. Kalshi sued in state court in June to block it, arguing the state can’t impose the penalty without a jury trial.