Better Markets wins the argument states have been making for two years

The brief that Better Markets filed in the Sixth Circuit was not, in structure, a novel legal document. It made the argument that consumer protection advocates have been making since Kalshi first claimed federal preemption as a shield: that event contracts on sporting outcomes are gambling under state law, that the CFTC's jurisdiction over derivatives does not extinguish that characterization, and that the Supremacy Clause does not reach as far as the platforms need it to reach. The Sixth Circuit agreed. What is new is not the argument but the count.

Three circuits have now produced rulings that state law survives contact with Kalshi's federal registration. That is not a trend in the ordinary sense — a trend can reverse. A split that deepens on the same question, with the same reasoning appearing in successive opinions, is something closer to convergence. The preemption argument that Kalshi's legal team built its entire structural defense around has not failed once at the margins. It has failed repeatedly at the core.

Better Markets' position has always been that the CFTC's designation of Kalshi as a designated contract market does not transform sports outcome contracts into something other than what they are under state gambling statutes. The Commodity Exchange Act gives the CFTC authority over commodity futures and swaps. The question the circuits keep answering is whether that authority occupies the field entirely — whether a CFTC-registered product is, by virtue of that registration, beyond the reach of Ohio's gambling laws, Tennessee's, now whatever states are watching the Sixth Circuit's docket. The answer, three times, has been no.

What I think the consensus reading misses is that this is not primarily a story about Kalshi losing. It is a story about the CFTC's enabling legislation. Congress wrote the Commodity Exchange Act to regulate derivatives markets. It did not write it to preempt state consumer protection law in the event a derivatives exchange decided to list contracts on NFL games. The preemption doctrine requires either express preemption — statutory language that says so — or field preemption, meaning Congress intended to occupy the regulatory space completely. Neither condition is cleanly met here, and the circuits are reading the statute rather than the platform's preferred outcome. Better Markets is not winning because its brief was persuasive. It is winning because the underlying legal architecture does not support what Kalshi is asking courts to do.

The Supreme Court petition that is already on file changes the calculus eventually, but not immediately. Until the Court grants certiorari, each additional circuit ruling against Kalshi makes the platform's operating position more difficult in states that follow those circuits, and makes it easier for other states to act without fear of immediate preemption injunctions.