Kalshi's Supreme Court petition now carries more weight

Kalshi's spokesperson said the ruling would not last. That confidence is doing a lot of work for a company that has now lost in the Sixth Circuit, the Ninth, and is watching the Third's contrary holding become the lone outlier rather than the foundation of a national framework.

Judge Julia Smith Gibbons wrote the opinion for a unanimous three-judge panel in Cincinnati. Her central finding was narrow and, for Kalshi, structurally damaging: the company had not demonstrated that its sports-event contracts satisfy the statutory definition of a swap. That is the threshold question. Without swap status, CFTC exclusive jurisdiction does not attach, and without exclusive jurisdiction, the preemption argument collapses entirely. Gibbons went further and held that even if the contracts were swaps, the Commodity Exchange Act would not preempt Ohio or Tennessee gambling law in any case. Both holdings, independently, defeat Kalshi's position.

Her reasoning on the statutory purpose of swaps is the part that deserves attention. The Commodity Exchange Act was built around instruments that hedge financial risk — indices, rates, financial measures. Gibbons was direct about the mismatch: determining the probability that a soccer game produces a certain number of corner kicks does not advance those purposes. The panel did not find the question close.

What the Cincinnati ruling does to the overall map is this: the Third Circuit held in April that Kalshi's contracts were not subject to New Jersey gambling law and that the CFTC has exclusive jurisdiction. Every other appellate court to reach the question has gone the other direction. New Jersey has already petitioned the Supreme Court to reverse the Third Circuit. The Sixth Circuit's ruling deepens the urgency of that petition without resolving it.

I have seen contract enforceability arguments that technically survive early review and then erode when political and institutional timing runs against them. Kalshi's preemption theory is more sophisticated than most, and it may ultimately prevail at the Supreme Court on the swap definition question. But the argument is now structurally isolated. A single circuit reading in Kalshi's favor, surrounded by contrary authority, is a circuit split — and circuit splits invite Supreme Court review, but they do not predict its outcome.

The Tennessee preliminary injunction that had blocked state enforcement has been vacated. Ohio's denial of a similar injunction stands. Enforcement, in both states, can proceed. That is not a procedural footnote. Kalshi must now operate in a patchwork where two states have active enforcement authority and the only circuit that had given it meaningful protection is the one New Jersey is trying to have reversed.