Another appeals court rules against prediction market provider Kalshi, says sports contracts are subject to state regulations

A three-judge panel of the Sixth Circuit Court of Appeals ruled on Sep. 25, 2026 that sports-related contracts offered by prediction market operator Kalshi do not qualify as swaps under the Commodity Exchange Act, and therefore are not subject to regulation by the Commodity Futures Trading Commission. The decision came in litigation over suits brought by Ohio and Tennessee regulators; Kalshi had sought injunctions to block the states from pursuing enforcement, with mixed results in lower federal courts prior to the appeals ruling.

The panel agreed Kalshi had standing to bring the case but concluded the contracts at issue do not hinge on events “associated with a potential financial, economic, or commercial consequence” as required for the statutory definition of a swap. The opinion discussed how defining the underlying “event” can change whether an outcome — for example, a New York Giants Super Bowl victory — would itself be an event or merely the outcome of an event, and found nothing in the statute that requires an event to be defined so as to exclude outcomes.

The Sixth Circuit decision joins the Eighth Circuit in holding that sports-related prediction contracts are not swaps, while the Third Circuit previously reached the opposite conclusion and found the CFTC has jurisdiction. That discord among federal appeals courts creates a circuit split that has already pushed at least one Third Circuit ruling toward the Supreme Court for potential review.

State officials have argued that prediction markets offering sports contracts compete with state-regulated gambling platforms and evade state taxation, and have also pointed to differing age limits — many prediction platforms serve users 18 and older, whereas most state gambling operations set a 21-year minimum. The Sixth Circuit ruling reinforces states’ ability to treat these products under their gaming frameworks, at least within that circuit’s jurisdiction.