Appeals court rules against Kalshi, says prediction markets can be regulated like gambling

The 6th U.S. Circuit Court of Appeals ruled against the prediction market Kalshi on Friday, determining states can regulate prediction market platforms like gambling in the latest blow to the industry.

In a unanimous ruling , the three-judge panel sided with Ohio and Tennessee, finding Kalshi did not show its sports-event contracts are “swaps” that typically fall under the jurisdiction of the Commodity Futures Trading Commission (CFTC).

Circuit Judge Julia Smith Gibbons, writing for the panel, said that even if Kalshi adequately showed how its sports-event contracts are swaps, the court ruled that the Commodity Exchange Act does not preempt states’ gambling laws like Kalshi argued.

The ruling, which consolidated lawsuits in both Ohio and Tennessee, follows a similar ruling from the 9th Circuit Court of Appeals last month.

The two rulings broke from the 3rd Circuit Court of Appeals’s April decision, which allowed Kalshi to operate in New Jersey as the company’s appeal process proceeds. The court ruled Kalshi is likely to succeed in its argument that federal law preempts New Jersey’s regulation.

The contradicting rulings are teeing up a fight in the U.S. Supreme Court.

Earlier this month, New Jersey urged justices to settle how prediction markets should be regulated. While the Supreme Court receives thousands of requests to take up cases annually, the court often looks to see whether appeals courts have entered decisions in conflict with one another on important matters.

While a bipartisan group of states is pushing back on Kalshi to maintain jurisdiction over the popular platforms, President Trump has supported the rise of prediction markets and backed the CFTC having exclusive authority over the platforms.

Twenty states are in active litigation over whether prediction markets can be regulated by the states. In July, 44 states signed a letter to the CFTC, arguing the agency does not have the authority to regulate sports-related event contracts.

Kalshi did not immediately respond to request for comment.