Overview
- A unanimous Sixth Circuit panel held Friday that Kalshi failed to show its sports event contracts meet the statutory definition of a “swap,” allowing Ohio and Tennessee to apply their gambling laws.
- The ruling vacated a Tennessee district judge’s preliminary injunction and upheld a federal court’s denial of an injunction in Ohio, removing immediate federal protection for Kalshi in those states.
- The opinion explained swaps are financial derivatives tied to events with direct economic consequences and found sports outcomes lack the inherent financial link required by the Commodity Exchange Act.
- The decision deepens a three‑way circuit split — the 3rd Circuit sided with federal preemption in April while the 9th and now the 6th have sided with state authority — increasing the likelihood of Supreme Court review.
- Practical effects include renewed state and tribal enforcement, possible geofencing and market bans, exposure to state taxes and age rules, and ongoing CFTC efforts to pause injunction lifts while rehearing and appeals proceed.