Sixth Circuit Allows Ohio, Tennessee to Regulate Kalshi

A Sixth Circuit panel on Friday, Sep. 25, 2026, held that Ohio and Tennessee may regulate Kalshi sports-event contracts under state gambling laws. Judge Julia Smith Gibbons wrote in KalshiEX LLC v. Schuler that Kalshi had not shown the contracts are swaps—chance-based deals treated as financial derivatives under the Commodity Futures Trading Commission—and that federal law does not preempt, or override, those state laws. The court upheld Ohio’s denial of a preliminary injunction and overturned an injunction Kalshi won in Tennessee. The panel said Kalshi’s preferred reading would leave no limit on chance-based contracts under the CFTC. The decision aligns with a Ninth Circuit ruling last month and an Eighth Circuit holding that sports contracts are not swaps; it conflicts with the Third Circuit’s April decision allowing Kalshi to operate in New Jersey. New Jersey has urged the Supreme Court to step in. Twenty states are in active litigation, and 44 states argued in a July letter that the CFTC lacks authority over sports-related event contracts. States also note federally regulated platforms often admit users at 18 and skip state gambling taxes, unlike many state products set at 21. Better Markets legal director Dominick Freda said the contracts are gambling not properly under the CFTC.