A unanimous three-judge panel of the 6th U.S. Circuit Court of Appeals ruled Friday that prediction market Kalshi cannot escape state gambling regulation, handing the industry another legal setback and intensifying a growing conflict among federal appeals courts.
The panel sided with Ohio and Tennessee, which had argued that Kalshi’s sports-related event contracts fall outside the exclusive jurisdiction of the Commodity Futures Trading Commission (CFTC). Writing for the court, Circuit Judge Julia Smith Gibbons held that even if Kalshi could demonstrate its sports contracts qualify as “swaps” under federal commodities law, the Commodity Exchange Act does not preempt states’ gambling statutes—rejecting the company’s core legal argument.
The decision consolidates lawsuits from both states and follows a similar ruling from the 9th Circuit Court of Appeals last month. Those two rulings now stand in direct tension with an April decision from the 3rd Circuit, which allowed Kalshi to continue operating in New Jersey while its appeal proceeds and found the company likely to succeed on its preemption claim.
That circuit split is widely expected to push the dispute toward the U.S. Supreme Court. Earlier this month, New Jersey formally urged the justices to resolve how prediction markets should be regulated. The high court often grants review when appeals courts have issued conflicting rulings on matters of national importance, though it receives thousands of such requests each year.
The legal battle has drawn in a bipartisan coalition of states seeking to preserve their authority over the fast-growing platforms. Twenty states are currently engaged in active litigation over whether they can regulate prediction markets. In July, 44 states signed a letter to the CFTC asserting that the agency lacks the power to oversee sports-related event contracts.
President Trump has taken the opposite position, backing the rise of prediction markets and endorsing exclusive CFTC authority over them. The administration’s stance puts it at odds with a broad group of state officials from both parties.
Kalshi did not immediately respond to a request for comment.
The 6th Circuit’s ruling adds urgency to an issue that touches on federalism, financial regulation, and the booming market for event-based contracts. As the circuit split deepens, pressure is mounting on the Supreme Court to settle the question—a scenario that could reshape the regulatory landscape for prediction markets nationwide.
