Sixth Circuit Court of Appeals Rules Against Kalshi in Both Ohio and Tennessee

• The Sixth Circuit Court of Appeals today ruled against Kalshi in both Ohio and Tennessee
• The Sixth Circuit Court of Appeals affirmed the denial of a preliminary injunction in Ohio and reversed a preliminary injunction decision in Tennessee
• Out of three circuit court of appeals rulings, Kalshi has now lost two decisions

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The U.S. Court of Appeals for the Sixth Circuit has affirmed a denial of a Kalshi preliminary injunction motion in Ohio and reversed a granted preliminary injunction in Tennessee, as the prediction market company faces its latest setback in the court of appeals.

A three-judge panel for the U.S. Court of Appeals for the Sixth Circuit today ruled Kalshi did not show that its sports event contracts satisfied the statutory definition of a swap, noting that the Commodity Exchange Act “neither expressly nor impliedly preempts Ohio’s or Tennessee’s gambling laws.” The decision affirmed the Southern District of Ohio’s denial of a preliminary injunction motion from Kalshi and vacates the Middle District of Tennessee’s entry of a preliminary injunction.

“Accordingly, we hold that the CEA does not expressly preempt the states’ sports-betting laws because those laws do not directly regulate DCMs but have only incidental effects on them,” Circuit Court Judge Julia Smith Gibbons wrote in the ruling.

Latest U.S. Court of Appeals Setback

In its written opinion, the three-judge panel noted that Kalshi did not show that its sports event contracts satisfied the necessary definition of a swap to fall under the exclusive jurisdiction of the Commodity Futures Trading Commission (CFTC).

The three-judge panel affirmed the states can regulate sports event contracts through their own gambling laws.

“And, even assuming that Kalshi’s sports-event contracts are swaps, we alternatively hold that the CEA neither expressly nor impliedly preempts Ohio’s or Tennessee’s gambling laws. Thus, we affirm the Southern District of Ohio’s denial of a preliminary injunction, vacate the Middle District of Tennessee’s entry of a preliminary injunction, and remand for further proceedings consistent with this opinion,” the judges wrote.

The panel noted that Kalshi’s reading of the Commodity Exchange Act (CEA) would “give the CFTC jurisdiction over event contracts that bear no relation to the goals Congress had in mind.”

It’s the latest U.S. Court of Appeals setback for Kalshi, which has now lost two of three court of appeals rulings. The most recent came from the Ninth Circuit this past August, which unanimously affirmed U.S. District Judge Andrew Gordon’s April 2025 decision to dissolve an approved Kalshi injunction against the state and allow the Nevada Gaming Control Board to uphold its state gambling laws against sports event contracts.

The three-judge panel voted 3-0 to affirm Judge Gordon’s decision, noting that it disagreed with Kalshi’s overly broad reading of the CEA and ruled that its sports event contracts are likely sports bets.

The Sixth and Ninth Circuit decisions differed sharply from a U.S. Third Circuit ‌Court ⁠of Appeals ruling this past April, in which the court ruled New Jersey could not regulate Kalshi’s sports event contract offerings, as they reached the CEA’s definition of a swap.

Kalshi awaits one more Court of Appeals decision in the Fourth Circuit, in which the court is evaluating Kalshi’s appeal of U.S. District Court for the Southern District of New York Judge Analisa Torres‘s decision to deny their preliminary injunction motion in the Empire State.

Moving Towards SCOTUS?

The deepening circuit court split may signify that the U.S. Supreme Court will eventually have to take up the question of regulatory power over prediction markets.

Both Robinhood and Crypto.com have already filed writs of certiorari with the U.S. Supreme Court, asking the court to evaluate whether or not states can regulate sports event contracts through their own gambling laws.

In its writ, Crypto.com submitted the following question to SCOTUS:

The question presented is whether the CEA preempts state regulation of sports-event contracts traded on a DCM.

While the writs request SCOTUS review the Ninth Circuit’s decision, the nation’s highest court does not have to accept either.

The Ninth Circuit’s decision combined both Robinhood and Crypto.com’s sports event contract cases into its Kalshi ruling. This decision allowed both Crypto.com and Robinhood to appeal the court’s ruling, which both have done by submitting writs of certiorari to SCOTUS.

Kalshi is taking a different path forward, as it recently requested an en banc hearing with the Ninth Circuit to appeal its decision.

Kalshi asserts the court’s decision creates a circuit split “on an exceptionally important question of federal preemption based on internally inconsistent reasoning that conflicts with the plain text of the CEA.”

“Kalshi is requesting the Ninth Circuit to consider the appeal en banc. This is necessary because the CFTC rule that the three-judge panel largely based its decision on has been repealed and is being replaced. Once that happens, material parts of the panel’s decision will be moot. In light of the incoming new rule, we look forward to continuing the proceedings in the Ninth,” a Kalshi spokesperson told Sports Betting Dime.

If approved, an en banc hearing will include all of the judges in the U.S. Court of Appeals for the Ninth Circuit, instead of just three. Kalshi asserts the Ninth Circuit’s initial decision “rejected well-reasoned decisions in favor of its erroneous interpretation of the CEA and the CFTC’s soon-to-be-replaced regulation.”