Invest5 publishers2 min readPublished
Unanimous 6th Circuit panel lets Ohio and Tennessee apply gambling law to Kalshi's sports contracts
Federal appeals judges ruled 3-0 that Ohio and Tennessee can apply gambling law to Kalshi's sports contracts. The panel ruled on two independent grounds, so Kalshi needs the Supreme Court to reverse both before state licensing stops being the rule operators plan around.
The Investor · Invest desk
What happened
- On Sept. 25 a three-judge Sixth Circuit panel upheld Ohio's refusal to shield Kalshi from state gambling law and threw out the injunction Kalshi had won in Tennessee.
- The panel found Kalshi had not shown its sports contracts are swaps under the Commodity Exchange Act, and that even as swaps they would not displace the two states' gambling rules.
- The ruling came a month after another appeals court sided with Nevada, while the Third Circuit's ruling for Kalshi in New Jersey still stands.
- Ohio's Casino Control Commission had told Kalshi it was selling sports products without a state license and alleged that people under the state's minimum age of 21 could trade.
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Why it matters
- constraint Kalshi can no longer plan sports as one national product: buyers in Ohio and New Jersey hold an identical contract under different legal protection, so distribution has to be planned state by state.
- decision Kalshi now has to decide whether to seek state gaming licenses, which would bring the 21 age floor Ohio and Tennessee impose, or keep litigating toward rehearing or the Supreme Court.
- precedent With two circuits for the states and one for Kalshi, any exchange relying on CFTC registration to list sports contracts should expect state regulators to challenge that defence circuit by circuit.
Kalshi has to win twice to get back where it was. The panel's second holding assumed Kalshi was right that its sports contracts are swaps, and ruled against it anyway [5]. A later win on the swap question, on remand or on appeal, would leave that ruling standing. The second holding is about the line between federal and state authority. It applies whatever the contract pays on, whether a golf result or a combination of player and game outcomes, both of which the 49-page opinion lists among Kalshi's markets [16][6].
The posture limits how far the ruling reaches. These were rulings on preliminary injunctions, orders that would stop state officials from enforcing their laws while the suits proceed, and both cases go back to district courts [7]. Nothing changes in practice in Ohio, where a district judge had already refused Kalshi that protection [18]. Tennessee is different. A district judge there had restrained state officials after the Sports Wagering Council sent Kalshi a cease-and-desist letter, so before the appeal the same legal theory had produced opposite orders inside one circuit [8]. With the Tennessee order vacated, neither state is restrained, and a state that is no longer restrained can try to enforce its existing rules [2][14].
Kalshi built its sports business on the federal route. It registered with the CFTC as a designated contract market in 2020, having previously listed contracts on climate, economics, elections and crypto, and self-certified sports event contracts on Jan. 22, 2025 [11][17][12]. Neither Ohio nor Tennessee has issued it a gaming license [12]. The Ohio commission's claim that people under 21 could use the exchange is an allegation in the court record, not a finding that any particular underage customer traded [9]. The report does not include Kalshi's trading volume or revenue by state.
Kalshi spokesperson Dani Lever told Reuters that the company expected the ruling to face further review [15]. A rehearing, a further appeal or a Supreme Court decision could change the position, and the remanded suits still have to be decided on the merits [14][7]. I think the evidence supports a specific claim. Two of the three circuits to rule on sports contracts have sided with the states [1], and in those states Kalshi's federal registration is an argument it has to win in court, one state at a time. The claim fails if the Supreme Court holds that the Commodity Exchange Act displaces state gambling law for contracts listed on a registered exchange [14].
What to watch
- Whether Kalshi seeks rehearing in the Sixth Circuit or asks the Supreme Court to resolve the conflict with the Third Circuit's New Jersey ruling.
- Whether Tennessee's Sports Wagering Council acts on its cease-and-desist letter now that the district court's injunction is gone.
- How the Ohio and Tennessee district courts decide the swap question on remand, on a fuller record than a preliminary-injunction motion.