Ohio · Business & Corporate Law · Appeals
Is Kalshi legal in Ohio and Tennessee? What the Sixth Circuit ruled on sports contracts
If you run or trade on a prediction market in Ohio or Tennessee, the Sixth Circuit says federal law does not stop either state from applying its sports betting laws to Kalshi's sports event contracts. The court said those contracts are not swaps, and that the states' laws would stand even if they were. Now the Supreme Court is being asked to settle the question for every state.
At a glance
The practical result
- Court
- Sixth Circuit, 3-0
- Outcome
- States win both appeals
- Law
- Commodity Exchange Act, the federal law on futures and swaps
- Immediate effect
- Ohio now, Tennessee later
In this article
- What the Sixth Circuit decided
- Are Kalshi's sports contracts swaps? Why the court said no
- Why Ohio and Tennessee treat this as sports betting
- How the panel ruled on each argument
- Why federal law does not block state gambling laws
- How the Ohio and Tennessee Kalshi lawsuits got here
- What the Kalshi ruling means in Ohio, Tennessee, Michigan and Kentucky
- What the ruling leaves to the Supreme Court and the CFTC
- What to check if you offer or trade event contracts
- Your questions about Kalshi in Ohio and Tennessee
Short answer: Is Kalshi legal in Ohio? The Sixth Circuit's answer, for now, is that federal law does not stop Ohio or Tennessee from applying their sports betting laws to Kalshi's sports event contracts while the Kalshi lawsuits go on. In KalshiEX LLC v. Schuler, decided September 25, 2026, a unanimous panel held that Kalshi had not shown its contracts are "swaps" under federal commodities law, and that even if they were, that law would not override the states' gambling rules. The ruling came at an early stage of both cases, and the Supreme Court has been asked to decide the same question.
What the Sixth Circuit decided
On September 25, 2026, the Sixth Circuit decided two appeals together: Kalshi's case against Ohio's gaming regulators and its case against Tennessee's. Judge Julia Smith Gibbons wrote the opinion for a panel that included Judges Eric L. Clay and Rachel Bloomekatz, and no judge wrote separately. The court affirmed the Ohio trial court's refusal to block the state's gambling laws, canceled the Tennessee order that had blocked Tennessee's, and sent both cases back to the trial courts, as the appeal docket records.
The ruling came at the preliminary injunction stage, so the court decided only whether Kalshi was likely to win, not who wins in the end. It gave two independent reasons Kalshi was not likely to win: its sports contracts are not swaps, and even if they were, the Commodity Exchange Act does not override the states' gambling laws. Because Kalshi couldn't show it was likely to win, the court did not weigh the harm to Kalshi or the public interest. An appeals lawyer can explain why a published ruling at this stage still guides every later case on the same question in the circuit.
Four weeks earlier, the Ninth Circuit reached the same result for Nevada, and the Sixth Circuit cited that decision throughout. Both Kalshi appeals belong to a wider run of 2026 rulings on when courts will and won't stop state and federal officials.
Are Kalshi's sports contracts swaps? Why the court said no
Kalshi runs a designated contract market, an exchange registered with the Commodity Futures Trading Commission (CFTC). On January 22, 2025, it began listing sports event contracts, yes-or-no positions on things like which teams advance in the NCAA tournament, how many corner kicks a soccer match will have, or multi-leg "parlays." The opinion notes that Kalshi marketed itself as "the first nationwide legal sports betting platform."
Federal law gives the CFTC "exclusive jurisdiction" over swaps traded on exchanges like Kalshi's. One of the law's six definitions of a swap covers a contract that pays out based on an event "associated with a potential financial, economic, or commercial consequence." The court agreed that a game result counts as an event. But it held that the event must be inherently tied to a financial consequence, the way a change in interest rates is, so that people would plausibly use the contract to hedge risk or discover prices. Effects on sponsors, broadcasters or local businesses are, in the court's words, "too attenuated, indirect, and speculative."
The panel noted that at oral argument Kalshi conceded that to a "layperson" it might be "hard to see how certain of these contracts have economic consequences." It also warned that Kalshi's reading had no stopping point. Because federal law makes it unlawful to enter into a swap off a regulated exchange, treating sports contracts as swaps could turn ordinary sports bets placed anywhere else into federal violations.
Why Ohio and Tennessee treat this as sports betting
Both states legalized sports betting after the Supreme Court struck down, in 2018, the federal law that had barred states from authorizing it. Ohio defines sports gaming as "accepting wagers on sporting events," and Tennessee requires bettors to be 21 and "physically located in Tennessee." Both states license operators, tax them and set consumer protections. According to the opinion, "Kalshi does not currently comply with either State's gaming laws."
The Ohio Casino Control Commission sent Kalshi a cease-and-desist letter saying it was offering sports gaming without a license, and called offering it to people under 21 "a flagrant disregard of Ohio's statutory gambling age limit." The commission also warned licensed sportsbooks that doing business with Kalshi could lead to action against them. In early 2026, the Tennessee Sports Wagering Council sent its own cease-and-desist letter. If your business receives a letter like these, lawyers who handle disputes with government agencies can explain what it demands and how fast you need to respond.
After the ruling, Tennessee Attorney General Jonathan Skrmetti said, as CNBC reported, "Kalshi attempted an end run around Tennessee law to avoid any of the rules or taxes associated with sports gambling. They failed." Kalshi spokesperson Dani Lever said the company disagreed with the decision and that "the ruling shows exactly why a state-by-state patchwork doesn't work."
- 2 of 3
- federal appeals courts to rule so far sided with the states
- 21
- minimum age to bet on sports in Ohio and Tennessee
- $3.2B+
- in state sports betting taxes in fiscal 2025, per the opinion
How the panel ruled on each argument
| The argument | What the panel held |
|---|---|
| Tennessee: Kalshi has no right to sue state officials to stop enforcement | Rejected. Kalshi can ask a federal court to block state laws it says federal law overrides. |
| Kalshi: its sports contracts are swaps under the Commodity Exchange Act | Rejected. A game result is an event, but not one inherently tied to a financial consequence. |
| Kalshi: anything traded on a registered exchange is under the CFTC's exclusive control, swap or not | Rejected. The CFTC's exclusive control covers only deals involving swaps or futures, not everything traded on the exchange. |
| Kalshi: express preemption, meaning the law's own words override state law | Rejected. The clause bars direct state regulation of how exchanges are licensed and run, not gambling laws that happen to reach them. |
| Kalshi: field preemption, meaning federal law covers the whole subject | Rejected. States have long regulated gambling, and the law expressly preserves state authority. |
| Kalshi: it cannot follow state rules and federal rules requiring fair access for all traders at once | Rejected. It can block users by location, as other companies do, and "expensive does not mean impossible." |
| Kalshi: state enforcement undercuts Congress's goal of uniform federal rules | Rejected. The law does not pursue uniformity at all costs, and it leaves room for the states. |
Why federal law does not block state gambling laws
Even assuming the contracts were swaps, the panel held that the Commodity Exchange Act would not preempt, or override, Ohio's and Tennessee's laws. The CFTC's "exclusive jurisdiction" clause does not use the words Congress normally uses to displace state law, such as "preempt" or "supersede," even though other parts of the same statute do. The court read the clause narrowly: it covers "direct regulatory and enforcement authority over licensing and operation" of swap trading on registered exchanges, and it leaves states free to enforce laws that only incidentally affect those exchanges.
The court also started from the assumption that federal law does not override the states in an area they have long regulated, like gambling. It pointed to the statute's own "Special Rule," which lets the CFTC bar event contracts involving activity that is unlawful under state law, as a sign that Congress expected a contract could be allowed in one state and not in another. On Kalshi's claim that complying state by state is impossible, the court noted that other companies geofence, meaning they block users by location, and that a cost is not the same as an impossibility.
How the Ohio and Tennessee Kalshi lawsuits got here
Kalshi starts listing sports event contracts after certifying to the CFTC on its own that they comply with federal rules.
After the Ohio Casino Control Commission's cease-and-desist letter, Kalshi sues Ohio's regulators in federal court in Columbus.
After Tennessee's cease-and-desist letter, Kalshi sues Tennessee's officials in federal court in Nashville.
Judge Aleta A. Trauger grants Kalshi a preliminary injunction, a temporary order blocking Tennessee's officials from enforcing the law against it.
Chief Judge Sarah D. Morrison denies Kalshi's request to block Ohio's laws. Kalshi appeals.
The Third Circuit rules 2-1 for Kalshi in its New Jersey case.
A separate Sixth Circuit panel refuses to block Ohio's laws while the appeal goes on.
The Sixth Circuit hears argument in the Ohio and Tennessee appeals.
The Ninth Circuit rules against Kalshi in Nevada.
The Sixth Circuit rules 3-0 for Ohio and Tennessee.
What the Kalshi ruling means in Ohio, Tennessee, Michigan and Kentucky
In Kalshi's federal case against Ohio, no court order ever stopped the state: the trial court refused Kalshi's request in March 2026, and a separate panel of the Sixth Circuit refused to step in during the appeal. In Tennessee, the ruling cancels the order Kalshi won in February. Under the federal appeals rules, the ruling takes effect when the court sends its formal order, called the mandate, back to the trial court. That normally happens seven days after the 14 days allowed to ask for a rehearing run out, which would be October 16, 2026. It comes later if Kalshi asks for a rehearing, or asks the court to hold its ruling while it petitions the Supreme Court.
The Sixth Circuit also covers Michigan and Kentucky, and its published opinions bind the federal courts there. Michigan Attorney General Dana Nessel's case against Kalshi is on appeal as No. 26-1639, and the court put that appeal on hold on August 24, 2026 until it decided these cases, and Kalshi must update the court within 21 days of the ruling. In Kentucky, the state sued Kalshi and Polymarket, and the CFTC sued Kentucky in June 2026 to defend its claim to sole control, so that fight also plays out under this ruling. If your business lists, markets or clears event contracts, business and corporate lawyers who work with regulated products can map where your contracts may count as sports betting.
The cases are about whether the states can enforce their laws against Kalshi, the company. The ruling does not decide whether people who trade on Kalshi break any state law. We found no announcement from Kalshi about changing its service in Ohio or Tennessee as of September 26, 2026.
| Question | After the ruling |
|---|---|
| Can Ohio apply its sports gaming laws to Kalshi's sports contracts? | Yes, as far as this case goes. The trial court refused to block Ohio, and the Sixth Circuit agreed. |
| Can Tennessee apply its sports wagering law? | Yes, once the ruling takes effect and the February 2026 order ends. |
| Does the ruling reach Michigan and Kentucky? | It binds federal courts there. Kalshi's appeal in Michigan's case was paused for this decision. |
| Is this a final ruling on the merits? | No. It decides only whether Kalshi was likely to win at this early stage. |
| Does it settle the question nationwide? | No. The Third Circuit ruled the other way for New Jersey, and the Supreme Court has been asked to decide. |
What the ruling leaves to the Supreme Court and the CFTC
Federal appeals courts are now split two to one. In April 2026, the Third Circuit held 2-1 for Kalshi in KalshiEX, LLC v. Flaherty, finding that its sports contracts are likely swaps and that federal law likely preempts New Jersey's gambling laws. The Sixth Circuit disagreed with that reasoning, as the Ninth Circuit did in August. According to the opinion, a Fourth Circuit appeal from a Maryland ruling against Kalshi, No. 25-1892, was still pending.
The Supreme Court has two requests in front of it. On September 2, 2026, New Jersey asked the Court to decide "whether the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act preempted States from regulating sports bets that occur within their jurisdictions" when those bets are offered on CFTC-registered markets. Crypto.com's derivatives exchange filed its own petition, No. 26-344, after losing in the Ninth Circuit. The Court has not said whether it will take either case.
The CFTC is also fighting the states in court. According to CNBC, it has sued nine states to defend its claim to sole control, and we found no such suit against Ohio or Tennessee as of September 26, 2026. Its position on the rules could also shift. Its June 12, 2026 proposal would rewrite the rule on event contracts that involve gaming, and we found no final rule as of September 26, 2026. The Sixth Circuit based its answer on what counts as a swap on the law's own words, not on the CFTC's current rule.
What to check if you offer or trade event contracts
A few filings and dates could change the answer in the coming weeks. This is general information, not legal advice, and the rules differ from state to state.
- Rehearing or a pause: whether Kalshi asks the Sixth Circuit to rehear the case, or to hold its ruling while it petitions the Supreme Court. Either would delay when the ruling takes effect in Tennessee.
- Back in the trial courts: what the Ohio and Tennessee judges do once the cases return to them.
- Michigan: Kalshi's update to the court in its appeal in Michigan's case, No. 26-1639, due within 21 days of the September 25 ruling.
- Supreme Court: whether the Court takes New Jersey's petition or Crypto.com's, No. 26-344, either of which could settle the question nationwide.
- CFTC: whether the agency finalizes its June 2026 proposal on event contracts that involve gaming.
- Your footprint: which states your users are in, and whether you can block users by location where your contracts may count as sports betting.
Your questions about Kalshi in Ohio and Tennessee
Is Kalshi legal in Ohio?
Nothing in Kalshi's federal case stops Ohio from treating Kalshi's sports contracts as unlicensed sports gaming for now. The Sixth Circuit did not declare Kalshi illegal. It held that Kalshi has not shown federal law likely stops Ohio from applying its sports gaming laws to those contracts.
Is Kalshi legal in Tennessee?
Tennessee can do the same once the ruling takes effect. That would normally be October 16, 2026, and later if Kalshi asks for a rehearing or for a pause while it petitions the Supreme Court. The ruling canceled the February 2026 order that had stopped Tennessee's officials from enforcing the state's sports wagering law against Kalshi.
Why does Kalshi say it is legal in every state?
Kalshi argues that its contracts are swaps traded on a federally registered exchange, which only the CFTC can regulate, so state gambling laws do not apply. The Sixth Circuit rejected that for its sports contracts, holding that a game result is not the kind of event with a financial consequence that makes a contract a swap. The Third Circuit accepted Kalshi's argument in a New Jersey case.
What does the ruling mean for Kalshi in Michigan and Kentucky?
It binds federal courts there as precedent. Published Sixth Circuit opinions govern federal courts in Kentucky, Michigan, Ohio and Tennessee. State courts and other circuits are not bound, and Kalshi's appeal in Michigan's case against it was paused to wait for this decision.
Will the Supreme Court decide the Kalshi lawsuit?
It has been asked to. New Jersey and Crypto.com's derivatives exchange have both filed petitions, and the federal appeals courts now disagree two to one. The Court has not said whether it will take either case.
Need a lawyer?
Dealing with something like this?
A ruling like this affects people and businesses differently. A lawyer can explain what it means for you, and we can help you find one in Ohio.
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