6th Circuit Kalshi Ruling Lets Ohio, Tennessee Regulate

• All three judges agreed Kalshi’s contracts on games fall outside the Commodity Exchange Act’s definition of a “swap.”
• Tennessee’s cease-and-desist order against Kalshi, frozen by a federal judge since January, can move forward once the ruling takes effect.
• Ohio’s proposed $5 million fine against Kalshi for unlicensed sports gaming is a separate action the ruling leaves the state free to pursue.
• Separate Supreme Court petitions from New Jersey, Robinhood and Crypto.com are already pending on the same preemption question.

CINCINNATI – Kalshi lost its federal preemption defense in Ohio and Tennessee on Friday, when the 6th U.S. Circuit Court of Appeals held that both states’ sports-gambling laws apply to its sports-event contracts. The decision clears Tennessee regulators to act on a cease-and-desist order a federal judge had frozen since January and leaves Ohio free to pursue the $5 million fine its casino regulator proposed in April.

What The Panel Decided

Judge Julia Smith Gibbons wrote for a panel that also included Judges Eric Clay and Rachel Bloomekatz.

Under the Commodity Exchange Act, a swap must turn on an event “associated with a potential financial, economic, or commercial consequence,” and the panel read that phrase to require an event “inherently associated” with such a consequence, the way a change in interest rates is. Who is named Super Bowl MVP, how many corner kicks a soccer match produces or whether an announcer utters a particular word on air does not qualify, the panel found.

The court added that even if the contracts were swaps, the Commodity Futures Trading Commission’s “exclusive jurisdiction” over them would not block Ohio or Tennessee from applying their own gambling statutes, because that federal authority reaches only the licensing and operation of exchanges, not ancillary state laws that only incidentally burden what gets traded on them.

The panel also quoted Kalshi against itself. In a Nevada federal court’s 2025 decision, the company was already on record that its contracts have “no inherent economic significance” and “carry no economic risks,” and the 6th Circuit treated those words as undercutting the preemption claim. Both cases now go back to the trial courts, with the Southern District of Ohio’s refusal to enjoin the state affirmed and the Middle District of Tennessee’s injunction vacated, according to the opinion.

Tennessee’s Enforcement Path Reopens

The Tennessee Sports Wagering Council told the CFTC in 2025 that Kalshi “accepts a sum of money risked on the outcome of a sporting event” without a state license, then sent the company a cease-and-desist letter early this year, the opinion recounts. Kalshi sued in Nashville, and U.S. District Judge Aleta Trauger blocked the state in January, first with a same-day temporary restraining order and then with a preliminary injunction after a hearing. Friday’s ruling vacates that injunction and returns the case to her court.

Attorney General Jonathan Skrmetti, himself a defendant in the case, welcomed the outcome as “a great win for Tennessee” in a statement carried by Courthouse News. “Sports wagering is heavily regulated because it can do a lot of harm, and I’m glad we thwarted Kalshi’s efforts to remove every safeguard and put Tennessee sports bettors at risk,” he said.

Tennessee online gambling law sets a minimum age of 21, limits wagers to people inside the state’s borders and imposes licensing, tax and consumer-protection duties, none of which Kalshi meets, the panel noted.

Ohio’s Fine Notice Stands Apart

Ohio’s fight over Ohio online gambling took a different path. The Ohio Casino Control Commission’s cease-and-desist letter called Kalshi’s offering of contracts to people under 21 “a flagrant disregard of Ohio’s statutory gambling age limit,” and U.S. District Judge Sarah Daggett Morrison in Columbus denied Kalshi’s injunction request. A 6th Circuit motions panel then refused on April 24 to block Ohio’s laws while the appeal was heard, finding Kalshi had shown at most that the merits were evenly balanced.

The commission separately issued a notice of intent on April 14 to fine Kalshi $5 million, stating that the company had offered its sports contracts since about January 2025 without a sports betting license and “pays no Ohio state taxes on sports gaming revenues and pays no licensing fees.”

Ohio taxes sports-gaming receipts at 20%, and the notice gave Kalshi 30 days to request a hearing. The opinion does not address the fine, which turns on the same preemption question the panel resolved against Kalshi at the preliminary-injunction stage.

A Split Headed For The Supreme Court

Federal appeals courts have now gone 2-1 against Kalshi. The 9th Circuit sided with Nevada on Aug. 28, while the 3rd Circuit in April found Kalshi likely to win the same preemption argument against New Jersey. A Maryland case is still awaiting a 4th Circuit decision.

New Jersey Attorney General Jennifer Davenport filed a petition Sept. 2 asking the Supreme Court to review the 3rd Circuit ruling. Companies like Kalshi “claim to offer legal sports betting in all 50 States, but they refuse to follow the gambling laws of any State,” she said in a statement announcing the filing. Robinhood and Crypto.com have since filed their own petitions, Bloomberg Law and Yogonet reported, and the Supreme Court has not said whether it will take the case.

Kalshi, for its part, has asked the full 9th Circuit to rehear the Nevada case rather than going straight to the justices, CoinGape reported this month.

Dani Lever, a spokesperson for Kalshi, pushed back on the panel’s statutory reading in a statement carried by Courthouse News. “The law does not require a swap to involve ‘intrinsic’ financial consequences — and even if it did, sports clearly do,” she said. “Markets can’t operate when the rules change at every state line, which is why Congress created a single federal regulator with nationwide rules,” she added.

Both states run licensed sports-betting markets within the patchwork of legal online gambling rules the 6th Circuit said states remain free to enforce. Under federal appellate rules, Kalshi has 14 days from the Sept. 25 judgment to ask the 6th Circuit to rehear the case, and the ruling does not take effect until the court issues its mandate after that window closes.