Kalshi, a prediction market regulated by the Commodity Futures Trading Commission, is facing conflicting rulings from US federal appeals courts regarding its sports-event contracts. The company argues that federal oversight preempts state gambling laws, but courts remain divided on the matter.
On September 25, 2026, the Sixth Circuit ruled in favor of Ohio and Tennessee, allowing those states to enforce local gambling laws against Kalshi. The court determined that the company's sports contracts do not qualify as swaps under the Commodity Exchange Act and that federal regulation does not override state authority.
This decision follows a similar ruling by the Ninth Circuit on August 28, 2026, concerning Nevada. Conversely, in April 2026, the Third Circuit issued a favorable ruling for Kalshi in a dispute with New Jersey, while a district court in Illinois also provided a victory for the platform.
Currently, more than 20 states are involved in litigation regarding Kalshi’s offerings. The company has implemented geofencing to restrict access to its sports contracts in states where local gambling laws apply, limiting its retail operations in those regions.
The ongoing split between the Third, Sixth, and Ninth Circuits creates uncertainty, as the same contracts are treated differently depending on the jurisdiction. The conflict may eventually require intervention from the US Supreme Court to determine if sports prediction markets fall under federal or state authority.
