The US Sixth Circuit Court of Appeals Rules Kalshi Sports Contracts Are Not Swaps and Are Not Subject to Commodity Futures Trading Commission Regulation

Sixth Circuit Says Kalshi Sports Contracts Are Not Swaps in Two-State Legal Battle

A three-judge panel of the Sixth Circuit Court of Appeals ruled that Kalshi's sports event contracts do not qualify as swaps under federal commodity law, according to CoinDesk. The decision means the Commodity Futures Trading Commission does not have the exclusive federal oversight claimed in the dispute, and the contracts may instead be governed by state gambling rules. The ruling covers two cases Kalshi brought against regulators in Ohio and Tennessee.

The court accepted Kalshi's standing, but rejected the swap label

The judges recognized Kalshi's right to bring the legal challenge, while disagreeing with the federal regulator's characterization of the products as swaps. If the contracts are not swaps, the Commodity Futures Trading Commission's federal jurisdiction over them becomes narrower, and the state gambling framework becomes the more relevant regulatory path. The outcome sharpens the boundary between sports event contracts and products treated as federally regulated commodity swaps.

Earlier appellate rulings point in different directions

The Sixth Circuit's decision widens a split among the federal appellate courts. The Third Circuit previously supported the Commodity Futures Trading Commission's jurisdiction over prediction markets, while the Eighth Circuit concluded that sports event contracts are not swaps. That creates competing precedents rather than a single national rule for the legal status of sports event contracts.

The Supreme Court could settle the jurisdictional line

The disagreement has moved into Supreme Court proceedings. A final Supreme Court ruling could determine whether sports event contracts are treated as federally regulated swaps or as state-regulated gambling products. The answer would define the regulatory authority of the Commodity Futures Trading Commission and the legal framework for Kalshi's sports contracts.