Kalshi loses appeal in court

Prediction market Kalshi lost on appeal when a court ruled that Ohio and Tennessee can regulate sports-event contracts under their state gambling laws.

The 6th US Circuit Court of Appeals ruled against Kalshi on Friday when a three-judge panel sided unanimously with Ohio and Tennessee, finding that the prediction market failed to demonstrate its sports-event contracts are “swaps” under the jurisdiction of the Commodity Futures Trading Commission (CFTC).

The ruling followed a similar ruling from the 9th Circuit Court of Appeals last month, which broke from an April decision by the 3rd Circuit Court of Appeals allowing the company to do business in New Jersey as its appeal process proceeds.

The April ruling said Kalshi was likely to succeed with its argument that federal law preempts New Jersey’s regulations, all of which has set up a potential Supreme Court case.

Cointelegraph reported on Wednesday that a group of state lawmakers had filed an amicus brief with the Supreme Court, urging it to weigh in on the case between Kalshi and state gaming authorities, potentially resolving whether state authorities or federal agencies have jurisdiction over prediction market companies.

The Core Dispute: New Jersey authorities and state gaming regulators are asking the Supreme Court to decide whether state gambling laws or federal oversight by the Commodity Futures Trading Commission (CFTC) govern sports event contracts.
The Lawmakers’ Position: According to Cointelegraph, the NCLGS argues that a ruling favoring Kalshi would leave states powerless to regulate sports betting on prediction markets, leading to widespread confusion and harming state regulatory regimes.
Kalshi’s Response: Kalshi has until November 9, 2026 to file its official response brief, having previously maintained that it cannot practically be subjected to oversight by 50 different state regulatory bodies.

The U.S. Supreme Court has not yet announced a final decision on whether it will grant certiorari to hear the jurisdictional clash over prediction markets. However, the urgency for the high court to intervene has intensified significantly due to a rapidly expanding circuit split across the federal judiciary

Deepening Circuit Split

While the Supreme Court is preparing for its initial evaluation of the pending petitions, the lower courts have increasingly fractured on whether prediction markets should be regulated by the federal Commodity Futures Trading Commission (CFTC) or individual states:

• The 3rd Circuit: Ruled in April 2026 that Kalshi’s sports event contracts constitute “swaps,” meaning federal law preempts New Jersey state gambling regulations.
• The 9th Circuit: Reached the opposite conclusion in late August 2026, ruling that states like Nevada can enforce their local gambling laws against Kalshi, Robinhood, and Crypto.com.
• The 6th Circuit: Issued a new ruling on September 25, 2026, dealing another blow to Kalshi by unanimously declaring that Tennessee and Ohio retain the authority to regulate these platforms.

Current Status at the Supreme Court

There are now three separate certiorari petitions actively pending before the Supreme Court seeking to resolve this nationwide gridlock. New Jersey officially petitioned the Supreme Court on September 2, 2026, to overturn the 3rd Circuit’s pro-Kalshi decision. Concurrently, companies like Robinhood have filed separate petitions pushing for swift high court intervention to reverse the 9th Circuit’s ruling.

Because circuit splits are the primary catalyst for the Supreme Court choosing to step in, legal experts expect the justices to heavily consider taking up the matter.