A federal appeals court sided with Ohio and Tennessee in their dispute with prediction market Kalshi over sports event contracts, leaving the platform to weigh a petition to the US Supreme Court.
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The US Court of Appeals for the Sixth Circuit ruled against Kalshi, upholding the position of Ohio and Tennessee that sports-event contracts listed on the platform fall under state regulation rather than exclusive federal oversight. The decision resolved Kalshi's appeal of a lower-court ruling that had already gone the states' way, meaning the company has now lost at two levels of the federal judiciary in this dispute. Because the Sixth Circuit's jurisdiction covers Ohio, Tennessee, Michigan and Kentucky, the ruling carries immediate weight for how the contested contracts are treated in those states. The outcome also shifts the center of gravity of the dispute from the appellate level toward the possibility of Supreme Court review.
Kalshi's central legal claim is that, as a designated contract market regulated by the Commodity Futures Trading Commission, its listed products fall under the federal Commodity Exchange Act and that this framework preempts conflicting state gambling statutes. That argument previously carried weight in a different setting: when Kalshi sued the CFTC itself over congressional control contracts, a federal district court cleared the way for those contracts to trade in 2024 after the agency had tried to block them. The current litigation is structurally different, however, because the opposing party is not Kalshi's federal regulator but state gaming authorities exercising their own police powers. If state law governs, an operator would generally need to satisfy state licensing, age-verification and reporting obligations, or stop offering those contracts to residents of the state in question.
Ohio and Tennessee, like a number of other states, have argued that event contracts tied to the outcome of sporting events function in practice like wagers and therefore belong inside state gambling regimes. That position has gained institutional weight since the 2018 Supreme Court decision in Murphy v. NCAA struck down the federal ban on sports betting, prompting most states to build licensed sportsbook frameworks with accompanying tax revenue and consumer-protection rules. Those frameworks give states a concrete fiscal and regulatory stake in how sports-related products are classified, beyond abstract questions of federal authority. The pushback against Kalshi is therefore part of a broader effort by state regulators to define the boundary between federally overseen derivatives and state-licensed betting.
The Sixth Circuit Court of Appeals ruled against prediction market Kalshi, siding with Ohio and Tennessee, which had argued that sports-event contracts should be regulated under state law. The decision upheld the states' position after Kalshi appealed an earlier ruling that had also gone against the company. Because the Sixth Circuit covers Ohio, Tennessee, Michigan and Kentucky, the ruling has direct effect for how those contracts are treated in that region.
Kalshi argues that as a CFTC-regulated designated contract market, its listed products are governed by the federal Commodity Exchange Act, which it says overrides conflicting state gambling laws. If that preemption argument fails, states can apply their own licensing, reporting and consumer-protection requirements to the same contracts. The outcome therefore determines whether a single federal framework or a patchwork of state regimes governs event contracts.
Yes, Kalshi's remaining federal option is to petition the Supreme Court for a writ of certiorari, and the ruling explicitly sets up that possibility. The Court accepts only a small share of the petitions it receives, though a disagreement between federal circuits on the same question is a factor it often considers. Similar disputes in other jurisdictions mean the issue could also arrive at the Court through a different route.
What the Sixth Circuit Decided
Kalshi's Preemption Argument
Why States Are Asserting Authority
The Route to the Supreme Court
What It Means for the Sector
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With the appellate ruling against it, Kalshi's remaining federal avenue is a petition for a writ of certiorari asking the Supreme Court to hear the case. The Court grants review in only a small fraction of the thousands of petitions it receives each year, and a conflict between federal circuits on the same legal question is one factor it commonly weighs when deciding whether to step in. Because similar disputes between prediction markets and state regulators are unfolding in other jurisdictions, the preemption issue could reach the justices through more than one procedural path. A grant of review would put the question of federal versus state authority over event contracts squarely before the country's highest court.
Kalshi is not the only platform affected by the unresolved boundary between federal derivatives oversight and state gambling law; other venues offering event-based contracts confront the same patchwork of state positions. The practical consequence for operators is geographic fragmentation, in which the same product may be permitted in one state, restricted in another and litigated in a third, raising compliance costs and legal exposure. For state regulators, the case helps establish how far their licensing and enforcement authority extends over products that their federal counterpart has already approved. The broader question — whether a federal designation shields a platform from state law — remains unsettled nationally until either the Supreme Court or Congress provides clarity. Based on public news sources.
Sports event contracts are financial instruments whose payout depends on the outcome of a sporting event, listed on regulated exchanges such as Kalshi rather than through a traditional sportsbook. Supporters describe them as derivatives subject to federal commodities oversight, while state regulators contend they are functionally equivalent to wagers. That classification dispute is the core of the litigation.
The Sixth Circuit's jurisdiction covers Ohio, Tennessee, Michigan and Kentucky, so the decision carries the most immediate weight for how the contested contracts are handled there. However, other states have pursued their own actions against prediction market platforms, and those cases proceed under different courts and different state statutes. The national picture will remain uneven until a higher court or Congress resolves the underlying question of authority.
Other venues that list event-based contracts face the same uncertainty about whether federal approval protects them from state gambling enforcement. In practice, that can mean offering a product in some states, restricting it in others and defending it in court elsewhere, which raises compliance costs across the sector. The ruling adds to the body of lower-court decisions that platforms, states and regulators will look to as the legal landscape develops.
