The Sixth Circuit says Kalshi's sports contracts are not swaps at all, and Ohio and Tennessee may police them

What happened

A Sixth Circuit panel decided KalshiEX LLC v. Schuler and KalshiEX LLC v. Orgel, Nos. 26-3196 and 26-5235, on 25 September 2026, eight weeks after argument on 30 July. Judge Julia Smith Gibbons wrote for the panel, joined by Judges Eric L. Clay and Rachel S. Bloomekatz, and no separate opinion is attached. The two appeals arrived from opposite results: the Southern District of Ohio had refused Kalshi a preliminary injunction against the Ohio Casino Control Commission, and the Middle District of Tennessee had granted one against the Tennessee Sports Wagering Council. The panel affirmed the first, vacated the second and remanded both. The first holding goes to the definition. The Commodity Exchange Act counts as a swap a contract that pays on an event "associated with a potential financial, economic, or commercial consequence", and the panel read that to mean the event "must be intrinsically associated with a financial consequence such that we can reasonably understand why hedging financial risk or ascertaining pricing information for the occurrence of that event would be desired and beneficial", giving a change in interest rates as the example. Sports results fail it, because Kalshi's contracts "have only downstream economic consequences, assuming they have the potential to cause economic consequences at all". The panel accepted Kalshi's point that a game's result can be the occurrence of an event, using a Giants Super Bowl win to show that the word turns on how the event is defined, and found against it on the consequence limb instead. It then held in the alternative that, even if the contracts were swaps, the Act "neither expressly nor impliedly preempts Ohio's or Tennessee's gambling laws", and rejected Kalshi's fallback that contracts on its exchange sit in the CFTC's exclusive jurisdiction even if they are not swaps.

Why it matters

The count of appeals courts has turned against the exchanges. A footnote in the opinion says "Two of our sister circuits have ruled on substantially the same question presented here", the Third Circuit for Kalshi in KalshiEX v. Flaherty and the Ninth against it in KalshiEX v. Assad on 28 August, and that "The appeal before the Fourth Circuit remains pending", from Maryland. So two circuits now side with the states and one with Kalshi, while New Jersey's petition asking the Supreme Court to take Flaherty is already filed. The Sixth Circuit also goes further than the Ninth. The Ninth decided preemption; this panel decided first that the contracts are not swaps at all, which removes the premise of the federal argument rather than only limiting its reach. The test draws a line through what a prediction market can list under federal cover. Contracts on interest rates or stock prices pass it, and the court leaned on the criminal consequence of the opposite reading: because swaps traded off an exchange are illegal, Kalshi's definition would "expose millions of law-abiding Americans to criminal liability". The opinion says Kalshi's reading "would give the CFTC jurisdiction over event contracts that bear no relation to the goals Congress had in mind". The Commission's own lawyers are listed among counsel for amici curiae in the Ohio appeal, and Bloomberg Law reports that the CFTC "unsuccessfully petitioned the Sixth Circuit to participate in oral arguments".

What is not settled

These are rulings on preliminary injunctions, so both cases return to the district courts. Whether Kalshi asks the full Sixth Circuit to rehear them or goes to the Supreme Court beside New Jersey's petition is in no document yet. The reports disagree on the map, and one is wrong. CoinDesk says the Third and Eighth Circuits had ruled before, with "the Eighth Circuit ruling that the sports-related contracts were not swaps". The opinion names the Third and the Ninth, and so does Bloomberg Law, whose story notes that an earlier version was corrected on how the Third Circuit ruled. CoinDesk is the outlier. The reach of the test beyond sports is also open. The opinion notes that Kalshi first listed contracts on climate, crypto, economics, politics and popular culture. A contract on a crypto price would appear to pass a test built on financial values and instruments, but the court decided only the sports contracts in front of it.