Sixth Circuit Court allows states to enforce gambling laws on Kalshi contracts

Sixth Circuit rules states can apply gambling laws to Kalshi sports contracts

A three-judge panel of the Sixth Circuit Court of Appeals in Cincinnati ruled on 25 September that Tennessee and Ohio may continue applying state gambling laws to Kalshi's sports event contracts, finding that Kalshi failed to demonstrate its products qualify as swaps under the Commodity Exchange Act.

The ruling cuts directly against Kalshi's central legal argument: that federal CFTC oversight preempts state gambling regulation. Judge Gibbons wrote that determining the probability of corner kicks in a soccer match, or whether a 30-leg parlay will hit, sits outside the Commodity Exchange Act's purpose of managing commercial risk and generating pricing information. States, the panel held, retain exclusive authority to define and regulate gambling under their police powers.

Kalshi spokesperson Dani Lever said the decision demonstrates why a state-by-state regulatory patchwork is unworkable, and called for Congress to affirm federal authority. The ruling lands alongside a contrary outcome in Chicago, where Judge Martha Pacold declined to accept Illinois' claim to regulate the same contracts — leaving the federal circuit map split.