A U.S. appeals court has ruled against prediction-market operator, Kalshi, allowing the states of Ohio and Tennessee to enforce their gambling laws against the company’s sports-event contracts and deepening a legal dispute that could ultimately reach the U.S. Supreme Court.
The 6th U.S. Circuit Court of Appeals unanimously rejected Kalshi’s argument that its sports contracts qualify as financial ‘swaps’ subject exclusively to federal oversight by the Commodity Futures Trading Commission (CFTC).
The court also ruled that federal commodities law does not prevent Ohio and Tennessee from enforcing their state gambling laws against Kalshi.
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The decision adds to a growing split among U.S. appeals courts.
The 9th Circuit ruled in August 2026 that Nevada could regulate Kalshi’s sports contracts while the 3rd Circuit in April 2026 reached the opposite conclusion in a case involving New Jersey.
New Jersey has already asked the Supreme Court to review the 3rd Circuit decision seeking a ruling on whether states can regulate sports betting offered through prediction markets.
The dispute centers on whether sports-event contracts offered by platforms such as Kalshi are financial derivatives under federal commodities law or gambling products subject to state regulation.
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Kalshi has argued that a state-by-state regulatory system would make it difficult for prediction markets to operate nationwide while state authorities have argued that sports betting falls within their traditional regulatory powers.
The latest ruling leaves the legal status of sports prediction markets increasingly dependent on the outcome of competing federal cases with Supreme Court review now a potential route toward resolving the federal-versus-state jurisdiction dispute.
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