Federal Appeals Court Rules Against Kalshi in Gambling Law Case

<p>A federal appeals court has ruled that states can enforce their gambling laws against the prediction market Kalshi, which claims it should only be regulated by the US government. On September 28, 2026, a three-judge panel in the US Court of Appeals for the Sixth Circuit ruled unanimously against Kalshi and in favor of Ohio and Tennessee.</p><p>While the US Commodity Futures Trading Commission (CFTC) has exclusive jurisdiction over "swaps," the judges determined that sports wagers offered on Kalshi do not meet the legal definition of swaps. Furthermore, the court concluded that even if Kalshi wagers were considered swaps, the regulatory framework established by Congress does not prevent states from enforcing gambling laws on prediction markets.</p><p>Judge Julia Smith Gibbons, a George W. Bush appointee, stated in the ruling, "We hold that Kalshi has not shown that its sports-event contracts satisfy the statutory definition of a 'swap' so as to fall within the scope of the CFTC's 'exclusive jurisdiction.' And, even assuming that Kalshi’s sports-event contracts are swaps, we alternatively hold that the CEA [Commodity Exchange Act] neither expressly nor impliedly preempts Ohio’s or Tennessee’s gambling laws."</p>