Sixth Circuit Joins Ninth Against Kalshi — Ohio and Tennessee Can Regulate Sports Contracts
The Sixth Circuit Court of Appeals ruled unanimously on September 25 that Ohio and Tennessee may apply their state gambling laws to Kalshi's sports event contracts, rejecting Kalshi's CFTC-preemption argument. The panel held that Kalshi's sports contracts are not 'swaps' under the Commodity Exchange Act, and added an alternative holding that even if they were swaps, the CEA does not preempt state gambling law. The ruling deepens the circuit split to 2-1 against Kalshi: the Third Circuit ruled for Kalshi in April; the Ninth Circuit ruled against in August; now the Sixth Circuit has ruled against. The ruling is expected to significantly increase the probability that the Supreme Court grants certiorari in the pending petitions from New Jersey and Robinhood.
The United States Court of Appeals for the Sixth Circuit ruled unanimously on September 25, 2026 that Ohio and Tennessee may enforce their state gambling laws against Kalshi's sports event contracts. The three-judge panel, writing through Circuit Judge Julia Smith Gibbons, rejected both of Kalshi's central preemption arguments. First, the panel held that Kalshi's sports event contracts do not meet the statutory definition of a 'swap' under the Commodity Exchange Act as amended by the Dodd-Frank Act — the threshold determination that would give the CFTC exclusive jurisdiction. Second, the panel added an alternative holding: even if Kalshi's contracts do qualify as swaps, neither the text nor the structure of the CEA expressly or impliedly preempts Ohio's or Tennessee's gambling statutes as applied to event contracts. The alternative holding is notable because it would survive even if a higher court disagreed with the panel's swap-definition analysis — on the alternative holding alone, the states win.
The Sixth Circuit ruling deepens the circuit split on the prediction market preemption question to 2-1 against Kalshi across three circuits. The Third Circuit (Philadelphia) ruled in April that the CEA preempts New Jersey's enforcement of its state gambling laws against Kalshi's sports contracts. The Ninth Circuit (San Francisco) ruled August 28 that Nevada can enforce its gambling laws — the opposite conclusion. Now the Sixth Circuit (Cincinnati) has joined the Ninth, holding that Ohio and Tennessee can also enforce. The split is now geographic: the East Coast (Third Circuit) is favorable to Kalshi; the Midwest (Sixth Circuit) and West Coast (Ninth Circuit) are not. Both the Ninth and Sixth Circuits cover states with major licensed sports betting industries — Nevada's casino industry, Ohio's and Tennessee's post-PASPA sportsbooks — which may partially explain the different instincts about federalism and state regulatory authority over gambling activity.
The lower court history in the combined Sixth Circuit case illustrates how geographically inconsistent the legal landscape had become before the circuit resolved it. The Tennessee district court sided with Kalshi — holding that CFTC preemption likely applied at the preliminary injunction stage. The Ohio district court sided with the state. The Sixth Circuit vacated the Tennessee lower court decision (ruling for the state, reversing the district court's finding for Kalshi) and affirmed the Ohio decision (ruling for the state, consistent with the district court). A single circuit has now produced a single ruling, but the inconsistency in how federal trial judges across the country are evaluating the same preemption question reflects the depth of the legal uncertainty that has accumulated.
The ruling's most significant immediate effect is on the SCOTUS cert calculus. The September 28 long conference — the Supreme Court's first conference of the October term — is the first opportunity for the justices to consider whether to grant certiorari in New Jersey's petition (filed September 2) and Robinhood's petition (filed September 9). Legal commentators had previously estimated cert probability at 60-70% based on the Third Circuit-Ninth Circuit split alone. With the Sixth Circuit now joining the Ninth in a direct conflict with the Third, the circuit split has become significantly broader and more deeply entrenched. Three circuits have now examined the same statutory preemption question and produced three separate analyses, two of which reach one conclusion and one of which reaches the opposite. That pattern is precisely what the Supreme Court's certiorari process is designed to resolve. Polymarket had priced SCOTUS cert grant by year end at 46% before the Sixth Circuit ruling; that probability is likely to move upward as markets process the ruling's effect on the cert calculus.
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Recent updates
Czech Republic Blocks Kalshi From October 15 — Polymarket Already Blocked Since July
The Czech Ministry of Finance added Kalshi to its list of unauthorized gambling operators on September 30, requiring ISPs to block the platform by October 15, 2026. Polymarket was similarly blocked by Czech authorities in July 2026. The Czech Institute for Gambling Regulation (IPRH), representing over 90% of the Czech licensed gambling sector, brought the Kalshi case forward. Czech authorities describe prediction markets as betting products that market themselves as investment tools. Kalshi and Polymarket are now blocked or under active enforcement in at least six European jurisdictions: Czech Republic, Belgium, France, Romania, Spain, and Germany.
SCOTUS Publishes First Orders List — No Prediction Market Cases Granted Yet
The Supreme Court published its first orders list of the October 2026-2027 term on October 2, granting certiorari in three cases — none of them prediction market cases. The absence was expected: response briefs from Kalshi to the New Jersey petition (filed September 2) and the Robinhood petition (filed September 9) are still pending. The Court typically considers cert petitions a few weeks after all responses are received. Legal observers expect the prediction market cert decision to come in late October or November 2026.
Kalshi Finalizing $1 Billion Raise at $40 Billion Valuation Ahead of IPO
Bloomberg reported on September 30 that Kalshi is finalizing a new funding round worth approximately $1 billion at a valuation of around $40 billion, expected to be the company's last private fundraise before an initial public offering. The round is being led by Sequoia Capital and Wellington Management, with Tiger Global and Dragoneer Investment Group also participating. The $40 billion valuation represents a nearly four-fold increase from Kalshi's $11 billion valuation in December 2025, a doubling from its $22 billion valuation in March 2026, and would make Kalshi one of the most valuable private fintech companies in the United States.