TLDR A federal appeals court ruled on Sept. 25 that Ohio and Tennessee can enforce gambling laws against Kalshi’s sports contracts. The court said Kalshi’s sports contracts are not swaps under federal law. Judges used Kalshi’s past court statements and its own rulebook against it. Kalshi is now 1-2 at federal appeals courts, with a Maryland case still pending. Kalshi’s response to New Jersey’s Supreme Court petition is due Nov. 9.
A federal appeals court ruled on Sept. 25 that Ohio and Tennessee can enforce their gambling laws against sports contracts offered by Kalshi. The decision was unanimous.
A three-judge panel of the U.S. Court of Appeals for the Sixth Circuit heard both cases together. Judge Julia Smith Gibbons wrote the opinion, joined by Judges Eric Clay and Rachel Bloomekatz.
The court upheld an Ohio federal judge’s refusal to block the state’s Casino Control Commission. It also threw out an order that had protected Kalshi from Tennessee’s sports wagering officials. Both cases now return to the district courts.
Kalshi argued its sports contracts are swaps, a type of derivative the Commodity Futures Trading Commission (CFTC) says it alone regulates. The court disagreed.
The judges said the event behind a swap must be “inherently associated” with a financial result, such as a change in interest rates. Gibbons wrote that sports results have “only downstream economic consequences,” if any.
The court added that even if the contracts were swaps, federal law would not override the two states’ gambling laws.
Court Points to Kalshi’s Past Statements
At oral argument, the judges asked how contracts on corner kicks or on whether an announcer says a certain word could have financial effects. Kalshi admitted that to a “layperson” it might be “hard to see” those effects, while noting sports is a “huge