Sixth Circuit rules against Kalshi

A three-judge federal appeals panel unanimously sided with Ohio and Tennessee against prediction market Kalshi on Friday.

Kalshi's sports bets aren't swaps

The court found Kalshi's sports wagers do not meet the legal definition of swaps under federal law, so the CFTC does not have exclusive jurisdiction.

Congress didn't block state laws

Even if Kalshi's contracts were swaps, the court ruled Congress did not prohibit states from enforcing their own gambling laws against prediction markets.

What the judge wrote

Judge Julia Smith Gibbons wrote that Kalshi failed to show its contracts qualify as swaps under federal law.

“We hold that Kalshi has not shown that its sports-event contracts satisfy the statutory definition of a 'swap'”

Why Kalshi was sued

Kalshi offers sports betting across the US without state gambling licenses or taxes, operating in states where sports gambling is illegal.

The key legal question

Courts must decide if sporting events have the financial consequences needed to qualify as swaps under federal law.

The Sixth Circuit's answer

Sports events have only downstream economic consequences, not the intrinsic financial link required for swaps, the court ruled.

“Kalshi's sports-event contracts have only downstream economic consequences, assuming they have the potential to cause economic consequences at all”

States win two of three cases

This is the third federal appeals court to rule on the question. States won in the Sixth and Ninth Circuits but lost in the Third Circuit.

Kalshi disputes the ruling

Kalshi said it disagrees with the decision and claims the circuit split proves states cannot regulate prediction markets fairly.

“The ruling shows exactly why a state-by-state patchwork doesn't work”

Supreme Court may settle it

New Jersey asked the Supreme Court to resolve the conflict between circuit courts. A Fourth Circuit case involving Maryland is still pending.