US Sixth Circuit Court ruled that Kalshi sports contracts are not swaps and should be subject to state regulations.

A panel of the United States Sixth Circuit Court of Appeals ruled on September 25 that sports-related event contracts offered by prediction market platform Kalshi are not swaps, according to a BlockBeats report published on September 26. The decision places those contracts under state regulations rather than the rules of the federal Commodity Futures Trading Commission, and it deepens a split among federal appeals courts over how federal and state authorities should treat prediction markets.

Why the panel rejected the swap definition

Kalshi sought injunctions against regulators in Ohio and Tennessee, asking the courts to block those states from suing it. A federal court in Ohio rejected Kalshi's motion, while a federal court in Tennessee granted it.

The Sixth Circuit panel focused on the statutory definition of a swap. It found that although Kalshi's sports event contracts are conditioned on an "event" occurring, the contracts do not depend on events with potential financial, economic or commercial consequences, so they do not meet the legal definition.

The panel illustrated its reasoning with the New York Giants winning the Super Bowl. If the "event" is defined as the Giants' victory, that victory is an event that has occurred. If the event is the game itself, the Giants' win is only the result. The panel said the statutory text does not clearly require outcomes to be excluded from the definition of an event, so it refused to add that limitation.

A circuit split that may lead to Supreme Court review

The ruling is the latest decision in a legal fight between states and prediction market providers. It increases the likelihood that the Supreme Court will ultimately intervene.

The Third Circuit previously ruled that the federal Commodity Futures Trading Commission has jurisdiction over prediction markets, while the Eighth Circuit ruled that sports-related contracts are not swaps. The Third Circuit case has already been appealed to the Supreme Court.

Why states are pushing prediction markets into their own frameworks

States have tried to bring prediction markets into their regulatory frameworks since the markets rose after the 2024 election. Their argument is that these markets can offer products similar to those of state-licensed platforms without paying state taxes. They also point to access: the markets often allow 18-year-olds to participate, while most state event prediction operators require participants to be 21.

For readers, the Sixth Circuit ruling means Kalshi's sports event contracts face a more direct state-law test in the Ohio and Tennessee cases, even as federal swap rules remain contested in other courts. The final boundary between federal commodity regulation and state oversight may depend on whether the Supreme Court agrees to hear the dispute.