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On the morning of September 26, a three-judge panel at the Sixth Circuit handed Kalshi its second consecutive appellate loss in under thirty days, ruling unanimously that Ohio and Tennessee retain the authority to regulate sports-event contracts under their own gambling laws. The court's reasoning was the same as the Ninth Circuit's the month before: Kalshi had not demonstrated that its contracts qualify as swaps under the Commodity Exchange Act, which is the jurisdictional hook the company needs for federal preemption to attach.

That makes two circuits now reading the statute the same way, against one circuit — the Third — reading it differently. The Third Circuit's April ruling, which allowed Kalshi to continue operating in New Jersey while its appeal proceeds, remains on the books. It has not been overturned. It simply sits alone.

This is where I part company with the framing I have seen most often this week, which treats the circuit split as evidence that Kalshi's Supreme Court petition is strengthening. I think the opposite is closer to the truth. A split created by one outlier circuit and resolved by two subsequent panels reading consistently the other way is not a strong split. It is a split with a direction. The Supreme Court takes cases to resolve genuine disagreement among circuits, and genuine disagreement requires circuits that are actually reading the same statutory language differently for defensible reasons. What the Ninth and now the Sixth have done is apply the same textual analysis and reach the same conclusion. The Third Circuit's April ruling was provisional — it assessed likelihood of success on appeal, not the merits — and it was issued before either of the two substantive rulings arrived.

The preemption argument Kalshi has been running is elegant in theory. The Commodity Exchange Act grants the CFTC exclusive jurisdiction over swaps, and if prediction market contracts on sports events qualify as swaps, no state can touch them. The problem is that two circuit courts have now looked at those contracts and found the definitional case unproven. The company has not lost on policy. It has lost on classification. That is a harder thing to fix at the Supreme Court level, because it requires the justices to interpret a statutory category rather than settle a separation-of-powers question, and statutory interpretation cases involving financial instruments do not always attract the Court's interest the way constitutional questions do.

The amicus brief from state lawmakers urging the Supreme Court to intervene is real pressure, but it cuts both ways. State legislators asking for Supreme Court clarity are legislators who believe they will win that clarity. They are not filing briefs out of anxiety.

What I am watching is the November deadline. The Supreme Court gave Kalshi until November to respond in the New Jersey matter. If Kalshi files a certiorari petition, the Court will have to decide whether this split — one provisional circuit ruling against two substantive ones — meets the threshold for review. I think it does not, and I think the prediction markets that have priced a Supreme Court grant at elevated probability are ahead of what the record currently supports.