TLDR
- A federal appeals court ruled on Sept. 25 that Ohio and Tennessee can enforce gambling laws against Kalshi’s sports contracts.
- The court said Kalshi’s sports contracts are not swaps under federal law.
- Judges used Kalshi’s past court statements and its own rulebook against it.
- Kalshi is now 1-2 at federal appeals courts, with a Maryland case still pending.
- Kalshi’s response to New Jersey’s Supreme Court petition is due Nov. 9.
A federal appeals court ruled on Sept. 25 that Ohio and Tennessee can enforce their gambling laws against sports contracts offered by Kalshi. The decision was unanimous.
A three-judge panel of the U.S. Court of Appeals for the Sixth Circuit heard both cases together. Judge Julia Smith Gibbons wrote the opinion, joined by Judges Eric Clay and Rachel Bloomekatz.
The court upheld an Ohio federal judge’s refusal to block the state’s Casino Control Commission. It also threw out an order that had protected Kalshi from Tennessee’s sports wagering officials. Both cases now return to the district courts.
Kalshi argued its sports contracts are swaps, a type of derivative the Commodity Futures Trading Commission (CFTC) says it alone regulates. The court disagreed.
The judges said the event behind a swap must be “inherently associated” with a financial result, such as a change in interest rates. Gibbons wrote that sports results have “only downstream economic consequences,” if any.
The court added that even if the contracts were swaps, federal law would not override the two states’ gambling laws.
Court Points to Kalshi’s Past Statements
At oral argument, the judges asked how contracts on corner kicks or on whether an announcer says a certain word could have financial effects. Kalshi admitted that to a “layperson” it might be “hard to see” those effects, while noting sports is a “huge business.”
The court said that if a layperson cannot see the effect, “It would be a stretch to say such a contract is ‘associated’ with potential economic consequences.”
The opinion said Kalshi “has agreed with this conclusion in past litigation.” It quoted earlier statements, noted in a 2025 Nevada federal court decision, that the sports contracts “carry no economic risks.”
The judges also noted that Kalshi’s lawyers promised not to list a contract on the color of the Super Bowl Gatorade shower. The court said Kalshi’s reading of the law would cover that exact contract.
The court also cited Kalshi’s own rulebook, which says user lawsuits against the exchange fall under New York law.
The opinion said Kalshi offers parlay contracts worth billions of dollars each month. It rejected the claim that following state-by-state rules was impossible, saying “expensive does not mean impossible.”
Reactions and Next Steps
Kalshi spokesperson Dani Lever told Courthouse News the law does not require a swap to involve “intrinsic” financial consequences. She said the ruling “shows exactly why a state-by-state patchwork doesn’t work.”
Tennessee Attorney General Jonathan Skrmetti called the decision “a great win for Tennessee.” The Ohio attorney general’s office did not respond to Courthouse News.
The ruling came at the preliminary-injunction stage. It does not order Kalshi to stop offering contracts, but it lets both states enforce their laws while the cases continue.
In April, Ohio’s regulator proposed a $5 million fine against Kalshi for offering sports gaming without a license. Kalshi sued in state court in June to block it.
Kalshi is now 1-2 at federal appeals courts. The Ninth Circuit ruled against it in Nevada on Aug. 28, while the Third Circuit sided with it in New Jersey in April. A Fourth Circuit ruling on Maryland is still pending.
New Jersey asked the Supreme Court on Sept. 2 to resolve the split. Kalshi’s response, first due Oct. 8, was extended on Sept. 22 and is now due Nov. 9.
