The 6th US Circuit Court of Appeals ruled against Kalshi on Friday, with a three-judge panel unanimously siding with Ohio and Tennessee. The court found that Kalshi failed to demonstrate its sports-event contracts are "swaps" under the jurisdiction of the Commodity Futures Trading Commission (CFTC), meaning the state gambling laws apply.
This decision follows a similar ruling from the 9th Circuit Court of Appeals last month, which contrasted with an April decision by the 3rd Circuit Court of Appeals that had allowed Kalshi to operate in New Jersey while its appeal proceeds. The April ruling had suggested Kalshi was likely to succeed in arguing that federal law preempts New Jersey’s regulations.
The conflicting circuit rulings have set up a potential Supreme Court case. State lawmakers have filed an amicus brief urging the Supreme Court to resolve whether state authorities or federal agencies have jurisdiction over prediction market companies like Kalshi.
