A three-judge panel of the 6th US Circuit Court of Appeals ruled unanimously against prediction market Kalshi on Friday, siding with Ohio and Tennessee in their effort to police the platform's sports-event contracts under state gambling law.

The court found Kalshi failed to demonstrate that its sports-event contracts qualify as "swaps" within the Commodity Futures Trading Commission's regulatory perimeter, according to the decision. The ruling lets the two states apply existing gaming frameworks to the company's products.

What did the court decide?

Kalshi had argued that federal derivatives law preempted state regulation of its products. The 6th Circuit panel rejected that theory, finding Kalshi's contracts do not fit the legal definition of swaps and therefore do not fall under exclusive federal oversight.

The 9th Circuit reached a similar conclusion last month, finding Kalshi's sports contracts fell outside the definition of swaps under the Commodity Exchange Act. Both rulings open the door for state regulators to license and tax Kalshi's sports book and to enforce consumer-protection rules against the platform.

How does the split reshape Kalshi's legal position?

The 3rd Circuit Court of Appeals reached the opposite result in April, granting Kalshi a preliminary injunction that allowed the company to keep offering sports-event contracts in New Jersey while its appeal proceeds.

That court concluded Kalshi had shown a likelihood of success on its federal preemption argument. The 3rd Circuit's reasoning turned on the specifics of New Jersey's regulatory regime, which the 6th and 9th Circuits treated differently.

The three-way split — Kalshi prevailing in the 3rd Circuit but losing in the 6th and 9th — produces the kind of inter-circuit conflict that typically attracts Supreme Court review. Kalshi now faces an uneven regulatory map across the federal judiciary, with the legality of its sports products depending on geography.

Is the Supreme Court likely to take the case?

A bipartisan group of state lawmakers has already filed an amicus brief urging the justices to weigh in, Cointelegraph reported Wednesday. The lawmakers want the high court to resolve whether state gaming authorities or federal derivatives regulators oversee platforms offering sports contracts.

Kalshi has not publicly indicated whether it will seek certiorari. The company runs one of the largest federally regulated prediction markets in the US, where users trade contracts on the outcome of elections, economic indicators and sporting events.

What are the immediate operational consequences?

Ohio and Tennessee can now move to enforce licensing, consumer-protection and anti-fraud rules against Kalshi's sports offerings in their jurisdictions. State regulators in other circuits will watch the litigation closely as they weigh their own enforcement options against federally registered platforms.

Competitors in the event-contract space, including Polymarket and other federally registered platforms, have treated the Kalshi case as a proxy battle over the sector's regulatory treatment. A Supreme Court ruling would settle whether event contracts sit under CFTC oversight or under state gambling regimes, reshaping market structure for an emerging asset class.

With two circuits aligned against Kalshi and a third preparing its own judgment, the company must decide over the coming months whether to seek Supreme Court review and consolidate the jurisdictional fight before the justices.