A panel of judges sitting on the Sixth Circuit Court of Appeals determined on Friday that the sports-oriented event contracts offered by prediction market operator Kalshi do not qualify as swaps, meaning they fall under state gaming oversight rather than the governance of the federal Commodity Futures Trading Commission.
This represents the most recent appellate decision regarding the ongoing legal disputes between various states and forecasting platform operators, and the verdict adds further impetus for the U.S. Supreme Court to ultimately take up the issue.
Friday’s judgment centers around a pair of lawsuits initiated by Kalshi against enforcement officials in Ohio and Tennessee. The enterprise sought court orders preventing those states from filing suit against it; an Ohio federal court rejected Kalshi’s request, whereas a Tennessee federal court approved it.
States have attempted to bring sports-related prediction market contracts under their own oversight regimes ever since these platforms surged in popularity following the 2024 election, contending that these services directly rival state-licensed betting platforms while delivering identical offerings to wagering websites and mobile applications. A primary grievance for numerous states is that federally monitored platforms evade state tax obligations while simultaneously challenging state-regulated counterparts. Another significant point of disagreement is that prediction markets frequently permit individuals as young as 18 to participate, contrasting with the minimum age of 21 enforced by most state-authorized gambling establishments.
During Friday’s proceedings, the three-judge panel expressed agreement that Kalshi possessed standing to initiate litigation, yet rejected the notion that the specific instruments in question constituted federally monitored swaps.
“While we agree with Kalshi that its sports-event contracts are conditioned on the occurrence of ‘event[s],’ we conclude that Kalshi’s contracts do not depend on events that are ‘associated with a potential financial, economic, or commercial consequence’ within the meaning of the statute,” the court declared in its opinion.
The decision cited the New York Giants winning a Super Bowl as a hypothetical scenario, noting that the outcome might hinge on how the specific “event” is characterized. If the event is identified as the Giants winning, that triumph would be categorized as “that event having occurred.”
Originally published at https://www.coindesk.com/policy/2026/09/25/another-appeals-court-rules-against-prediction-market-provider-kalshi-says-sports-contracts-are-subject-to-state-regulations.
