Sixth Circuit Joins Ninth Against Kalshi — Ohio and Tennessee Can Regulate Sports Contracts
The Sixth Circuit ruled unanimously on September 25 that Ohio and Tennessee can apply their gambling laws to Kalshi's sports event contracts — the second circuit loss for Kalshi in a month. The panel held the contracts are not 'swaps' under the CEA, and alternatively that the CEA doesn't preempt state gambling law even if they are. The circuit split is now 2-1 against Kalshi (Third Circuit for; Sixth and Ninth against), sharply increasing the pressure on the Supreme Court to take the case.
The Sixth Circuit Court of Appeals ruled unanimously on September 25, 2026 that Ohio and Tennessee may enforce their state gambling laws against Kalshi's sports event contracts. The panel, writing through Circuit Judge Julia Smith Gibbons, held (1) that Kalshi's contracts are not 'swaps' under the Commodity Exchange Act as amended by Dodd-Frank, removing the statutory basis for CFTC exclusive jurisdiction; and (2) alternatively, that even if the contracts are swaps, the CEA neither expressly nor impliedly pre-empts state gambling statutes. The alternative holding is legally significant: it would allow the states to prevail even if a higher court disagreed with the panel on the swap definition. The Tennessee district court had sided with Kalshi; the Sixth Circuit vacated that decision. The Ohio district court had sided with the state; the Sixth Circuit affirmed.
For UK readers, the Sixth Circuit's alternative holding is analogous to a UK Court of Appeal ruling that gives two independent grounds for the outcome — ensuring that even if the Supreme Court overturns one, the other stands. The equivalent in UK gambling regulation would be a court saying: 'These are not financial derivatives under FSMA (so the FCA has no jurisdiction), but even if they were, FSMA's framework doesn't pre-empt the Gambling Act.' The prediction market sector faces the same structure: CFTC argues its CEA jurisdiction is exclusive; states argue the CEA doesn't reach these contracts at all, and even if it does, it doesn't displace state gambling law. Two of three circuits have now accepted the states' position; one has accepted the CFTC's.
The lower court inconsistency that the Sixth Circuit resolved is itself illustrative of the sector's legal uncertainty. Tennessee's federal district court sided with Kalshi at the preliminary injunction stage — suggesting at least one federal trial judge found Kalshi's preemption argument persuasive enough to grant preliminary relief. Ohio's federal district court sided with the state. The same question of federal law, applied by two federal courts in the same circuit with identical statutory analysis, produced opposite results. This kind of intra-circuit district court divergence is exactly the kind of disorder that circuit courts of appeal exist to resolve — and the Sixth Circuit has now resolved it against Kalshi in both states.
The combined circuit split — Third Circuit (April, for Kalshi), Ninth Circuit (August 28, against), Sixth Circuit (September 25, against) — is now the dominant fact in the prediction market legal landscape. The Supreme Court's September 28 long conference is the first opportunity for the justices to act on the New Jersey and Robinhood cert petitions. Commentators who had estimated cert grant probability at 60-70% based on the two-circuit split are likely to revise those estimates upward following the Sixth Circuit's ruling: a three-circuit conflict, with two circuits in explicit disagreement with the Third, is a stronger cert petition than a two-circuit split. Whether the Court acts immediately at the long conference, or waits for Kalshi's response briefs before conferencing the petitions, SCOTUS review of the prediction market question is now widely expected by legal observers before the end of the October 2026-June 2027 term.
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Recent updates
Czech Republic Blocks Kalshi From October 15 — Polymarket Already Blocked Since July
The Czech Ministry of Finance listed Kalshi as an unauthorised gambling operator on September 30, requiring ISPs to block it by October 15. Polymarket was similarly blocked in July 2026. Both major US prediction market platforms are now blocked or under active enforcement in at least six European jurisdictions: Czech Republic, Belgium, France, Romania, Spain, and Germany. European regulators treat prediction market sports contracts as gambling regardless of CFTC regulatory status.
SCOTUS Publishes First Orders List — No Prediction Market Cases Granted Yet
The Supreme Court published its first orders list of the new term on October 2 — three cases granted, no prediction market cases. The absence was expected: Kalshi's response briefs to the New Jersey and Robinhood petitions are still pending. The Court typically conferences petitions a few weeks after all responses are in. Legal observers expect a prediction market cert decision in late October or November 2026.
Kalshi Finalising $1 Billion Raise at $40 Billion Valuation Ahead of IPO
Bloomberg reported on September 30 that Kalshi is finalising a new $1 billion funding round at a ~$40 billion valuation — the company's last planned private round before an IPO expected as early as 2027. Sequoia Capital and Wellington Management lead; Tiger Global and Dragoneer also participating. Kalshi was valued at $11 billion in December 2025 and $22 billion in March 2026 — a near four-fold increase in under a year. Polymarket closed a $1 billion round in September at a $15-20 billion valuation.