Sixth Circuit Rules States Can Regulate Kalshi Sports Contracts
What happened
On September 26, 2026, the U.S. Court of Appeals for the Sixth Circuit ruled that Kalshi's sports-event contracts are not federally classified as swaps, allowing states to enforce their gambling laws.
The Context
- State Authority: The ruling reinforces state control over sports betting, with 44 states viewing prediction market contracts as unlicensed gambling.
- Circuit Split: This decision adds to a growing divide among federal appeals courts, with two siding with states and one with Kalshi, raising the likelihood of a U.S. Supreme Court review.
- Kalshi's Position: Kalshi argues for a uniform federal standard, claiming inconsistent rulings create uncertainty in the market.
The Number
— This is the number of U.S. states that consider prediction market sports contracts as sports betting rather than federally regulated swaps, highlighting the fragmented regulatory landscape.
Takeaway
As the legal landscape evolves, market participants may face a patchwork of compliance requirements until a higher court intervenes.
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