Kalshi faces legal challenges as court battles escalate

Kalshi has spent much of 2026 arguing that its sports contracts belong to Washington, not to state gambling regulators. The federal appeals courts are increasingly unconvinced. On September 25, 2026, the US Court of Appeals for the Sixth Circuit sided with Ohio and Tennessee. The ruling lets both states enforce their gambling laws against Kalshi’s sports-event contracts, and it lands only weeks after a similar loss out West. What the Sixth Circuit actually decided Kalshi is a prediction market regulated by the Commodity Futures Trading Commission (CFTC). Users trade contracts tied to the outcome of real-world events, including sports games. The company’s core legal argument is about preemption. Because a federal regulator oversees it, Kalshi contends that state gambling statutes should not apply to its products. The Sixth Circuit rejected that view on two fronts. First, it found that Kalshi’s sports-event contracts do not qualify as “swaps” under the Commodity Exchange Act (CEA), the federal statute that defines the products the CFTC governs. Second, the court held that federal law does not override state rules on gambling. A CFTC-regulated label does not automatically shield a pro...