What happened
The US Court of Appeals for the Sixth Circuit ruled against Kalshi on Friday in its consolidated challenge to cease-and-desist orders issued by gambling regulators in Ohio and Tennessee, Crypto. News reported. The state agencies had argued that Kalshi's event contracts on sports outcomes and elections meet the definition of gambling under their statutes, and therefore require state licensing regardless of Kalshi's federal registration as a Designated Contract Market with the Commodity Futures Trading Commission.
Kalshi had argued the Commodity Exchange Act preempts state gambling law when applied to CFTC-regulated derivatives. The Sixth Circuit disagreed. The decision comes about a month after the Ninth Circuit sided with Kalshi in a parallel dispute against the Nevada Gaming Control Board, granting an injunction that let the platform keep operating there.
A separate New Jersey case produced a conflicting ruling earlier and remains live.
Why it matters
This is now a textbook circuit split. Two federal appeals courts have reached opposite conclusions on whether a CFTC-registered exchange can offer sports and election contracts in states that classify those markets as gambling. Circuit splits are the single strongest procedural signal for Supreme Court review, and the question sitting underneath - who regulates event contracts, Washington or the states - has been unresolved since the CFTC first tangled with PredictIt more than a decade ago.
For Kalshi, the practical impact is immediate. The company either pulls its sports and election markets from Ohio and Tennessee, or it defies the ruling and invites enforcement. Neither option scales.
A national prediction market that has to geofence half its product line by circuit boundary is not the same business the company pitched to venture backers who valued it at over $2 billion earlier this year.