Community Trust ScoreVerified
Kalshi lost again. A unanimous three-judge panel at the 6th US Circuit Court of Appeals ruled against the prediction market platform Friday, siding with Ohio and Tennessee in a dispute over whether sports-event contracts fall under state gambling laws or federal oversight.
The panel’s conclusion was pretty blunt: Kalshi didn’t prove its contracts qualify as “swaps” under the Commodity Futures Trading Commission’s jurisdiction. That’s a big deal. The CFTC has been Kalshi’s regulatory anchor, the federal body the company has leaned on to argue that state gambling rules can’t touch it. The 6th Circuit wasn’t buying it.
Not a one-off.
Three Circuits, Three Different Answers
The 6th Circuit’s ruling lands right alongside a similar decision from the 9th Circuit Court of Appeals, which came down last month and took the same basic position — state law wins. But the 3rd Circuit Court of Appeals went the other way back in April, letting Kalshi keep operating in New Jersey while its appeal moved forward. That 3rd Circuit call basically said federal law might supersede New Jersey’s state regulations, at least for now.
So you’ve got three circuit courts, and they can’t agree. The 9th and 6th say states can regulate these contracts. The 3rd gave Kalshi a temporary pass in New Jersey. That kind of split is exactly the situation that pushes a case toward the Supreme Court, and that’s where things seem to be heading.
The fragmented picture is genuinely messy for anyone trying to run a prediction market business across state lines. Compliance in New Jersey looks different from compliance in Ohio, which looks different from California. It’s not really a workable situation long-term, and that’s probably why this has escalated so fast.
State Lawmakers Push the Supreme Court to Step In
A group of state lawmakers filed an amicus brief with the Supreme Court this week, urging the justices to take up the case and clarify who actually has authority here — state gaming regulators or federal agencies like the CFTC. The brief doesn’t seem to be pushing for one side to win outright so much as demanding a clear answer, because right now there isn’t one.
That’s a telling move. When state legislators go to the trouble of filing an amicus brief at the Supreme Court level, it signals that the jurisdictional question has gotten big enough to worry people beyond just the companies involved. Prediction markets have grown fast. The idea that a patchwork of state-by-state rules could govern them — or block them entirely — has real economic weight.
And Kalshi isn’t small. It’s been one of the more prominent players pushing prediction markets into mainstream financial conversation, especially after the CFTC’s earlier battles over event contracts drew attention from traders and crypto-adjacent market participants alike. The regulatory gray zone around these platforms has always been part of the story, but the circuit split makes it impossible to ignore.
Unclear whether the Supreme Court takes it. The justices get thousands of cert petitions and accept a fraction. But a genuine split between circuit courts on a federal preemption question is one of the cleaner arguments for why the Court should weigh in.
What Kalshi’s Legal Whiplash Means for the Industry
The April 3rd Circuit ruling gave Kalshi a window in New Jersey — and probably some optimism that federal preemption arguments had legs. The 6th Circuit just slammed that window shut in Ohio and Tennessee. The 9th Circuit did the same last month somewhere else. So the company is basically operating in a patchwork legal environment where its status varies depending on which state and which circuit you’re asking about.
That’s a hard way to build a business. Prediction markets broadly have been trying to find stable regulatory footing for years. The CFTC has been both a shield and a source of uncertainty. Federal oversight sounds cleaner than navigating 50 state gaming commissions, but only if the courts agree that federal jurisdiction actually applies — and right now, two out of three circuits say it doesn’t.
State lawmakers who filed the brief want uniform rules. Whether that means federal preemption wins or states keep control, they want someone to decide. The current situation — where Kalshi can operate in one state and get blocked in another based on which circuit governs — isn’t a regulatory framework so much as a legal coin flip.
Kalshi’s next move probably depends on whether the Supreme Court agrees to hear the case. No timeline on that decision yet.
Frequently Asked Questions
What did the 6th Circuit Court rule about Kalshi?
The 6th Circuit ruled unanimously that Kalshi’s sports-event contracts are subject to Ohio and Tennessee state gambling laws, finding that Kalshi failed to show the contracts qualify as “swaps” under CFTC jurisdiction.
Why are there conflicting court rulings on Kalshi?
Three different circuit courts have weighed in with different results — the 9th and 6th Circuits sided with state authority, while the 3rd Circuit allowed Kalshi to keep operating in New Jersey during its appeal, creating a split that could push the case to the Supreme Court.
Why It Matters
The ruling by the 6th Circuit underscores the ongoing regulatory challenges faced by prediction markets like Kalshi, which are navigating a complex landscape of state and federal laws. This decision could set a precedent that impacts the operational framework for similar platforms, potentially limiting their growth and innovation in a sector that is increasingly attracting interest from both investors and regulators. The outcome of Kalshi's appeal to the Supreme Court may further shape the future of predictive trading and its regulatory environment in the U.S.
