Kalshi Seeks Sixth Circuit Review of Sports Betting Ruling

Kalshi has requested a rehearing from the full U.S. Sixth Circuit Court of Appeals after a September 25 ruling favored sports gambling regulators in Ohio and Tennessee. The prediction market platform is challenging the decision allowing states to enforce gambling restrictions on its sports event contracts.

The three-judge panel previously determined that Kalshi had failed to demonstrate that its sports contracts qualified as swaps under federal commodities law. The ruling also indicated that even if the contracts met that classification, federal regulations would not necessarily override state gambling laws.

Consequently, the appeals court upheld the denial of an injunction against Ohio regulators and removed protections preventing Tennessee authorities from taking enforcement action.

Ohio's Casino Control Commission ordered Kalshi to stop offering sports contracts in March 2025, while Tennessee's Sports Wagering Council issued a similar directive in January 2026.

Kalshi argues that the Commodity Futures Trading Commission (CFTC) holds exclusive authority over derivatives traded on federally designated exchanges. Its attorneys maintain that the Sixth Circuit decision conflicts with established federal appeals court precedents.

The legal challenge follows significant regulatory developments involving prediction markets.

On October 9, the CFTC proposed expanding the federal definition of swaps to explicitly cover event contracts involving sports, politics, weather and cultural activities.

CFTC Chairman Michael Selig described these instruments as commodity derivatives falling under federal oversight. The agency opened a 30-day public comment period following publication in the Federal Register.

Separately, the regulator introduced an interim final rule excluding traditional casino gambling and sportsbook wagers from the swap definition.

Kalshi cited both regulatory actions in its rehearing request, arguing that exchange-traded prediction contracts differ legally from conventional sportsbook bets.

Meanwhile, conflicting federal court decisions continue complicating the prediction market industry's regulatory outlook.

The Third Circuit previously sided with Kalshi in New Jersey, while the Ninth Circuit supported Nevada gambling regulators. Kalshi has also requested a full Ninth Circuit rehearing.

New Jersey officials are seeking U.S. Supreme Court intervention, with Kalshi facing a November 9 response deadline.

The NFL supported Supreme Court involvement on October 8, emphasizing state regulators' role in protecting sports betting integrity.

Regulatory pressure also extends beyond Kalshi. New York sued rival prediction market platform Polymarket in September over allegations of operating an illegal gambling business.