Appeals court lets Tennessee & Ohio regulate Kalshi as gambling
The ruling contradicts a 3rd Circuit decision that shielded Kalshi from New Jersey’s gambling law.
The hit
A U.S. appeals court has sided against Kalshi, ruling that Tennessee & Ohio can regulate its event contracts under state gambling laws. The 6th Circuit Court of Appeals found Kalshi failed to show its sports contracts count as federally regulated swaps, according to Reuters.
Why it matters
The ruling hands states fresh power to treat prediction markets as gambling rather than financial products, undercutting Kalshi’s bet that federal law pre-empts state rules everywhere. With appeals courts now split 2-1, traders face a patchwork of state access until the Supreme Court potentially steps in. Kalshi says it does not expect the ruling to hold.
The record
| Ruling date | Sept. 25, 2026 |
|---|---|
| States covered | Tennessee & Ohio gambling laws not pre-empted by federal law |
| 9th Circuit (Nevada) | ruled last month that Kalshi’s contracts are subject to state gambling law |
| 3rd Circuit (New Jersey) | ruled in April that Kalshi’s contracts are not subject to state gambling law |
| Next move | New Jersey has asked the Supreme Court to overturn the 3rd Circuit ruling |
What happens next
Watch for a possible Supreme Court decision on whether to hear the New Jersey case.
Sources: Court rules against Kalshi, says TN can regulate prediction markets
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