Court Rules States Can Regulate Kalshi Like Gambling
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Right 33%
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What happened
The 6th U.S. Circuit Court of Appeals ruled Friday that Ohio and Tennessee may apply their state gambling laws to sports-related event contracts sold by Kalshi, a prediction-market platform on which users take yes-or-no positions on future outcomes. A unanimous three-judge panel held that Kalshi had not shown those contracts meet the Commodity Exchange Act’s definition of a “swap,” which would place them under the exclusive jurisdiction of the federal Commodity Futures Trading Commission; alternatively, the panel held that even if the contracts were swaps, the Act neither expressly nor impliedly preempts the two states’ gambling laws. The decision overturns a Tennessee federal district court ruling that had sided with Kalshi and reaffirms an Ohio district court ruling that had sided with the states. Kalshi contends the contracts are federally regulated financial derivatives; the states contend they are sports betting. The ruling adds to a circuit split: the 9th Circuit last month held that Nevada may regulate similar contracts as sports bets, while the 3rd Circuit in April held that the CFTC has exclusive authority over all swaps, a decision New Jersey has asked the Supreme Court to review.
Sourcing check · Mostly on the record · 3 articles
2 of 3 articles cite a named source for the story. It was on the record from the first report.
What these terms mean and how they're counted
- On the record · names a source 2 of 3
- On the record means the article cites a source by name for the story's main claim: a person, or an institution speaking officially, such as a company statement or a named agency's spokesperson. The opposite is an unnamed source. The count is how many of the counted articles cite at least one such source; the names are everyone named across them, each once however the articles spell it. Here: Jonathan Skrmetti and 6th U.S. Circuit Court of Appeals
- Primary evidence · cites a document or data 3 of 3
- Primary evidence means the article cites a record you could check yourself: a court filing or ruling, a dataset or report, a recording or transcript, an official statement or press release, market data. A quote is not a document. The count is how many articles cite one. Here: court ruling, court opinion
- Credits another outlet 0 of 3
- The article says the story comes from another outlet's reporting (“first reported by Reuters”). Those articles relay the story; they are not independent confirmation. Here: Each article presents its own reporting.
- Unnamed sources 0 of 3
- The main claim is attributed to people who are not identified: “people familiar with the matter”, “officials said”. The count is how many articles do this.
- How it developed
- When the first report landed and whether it named anyone; when the first named source and the first document appeared. Here: First report Sep 25, 20:34 UTC by New York Post, naming its source. First document in the first report, from New York Post (court ruling).
- Not counted 0
- Opinion, analysis and video pieces, and articles too short to assess. Every count above is out of the counted articles. An article republished under a new headline is one article.
This is about who is cited, not whether the story is true. Each source below says what it names. How we count
Omitted — what each side leaves out
Unpacked
Right-leaning coverage leaves out that federal appeals courts have split, so a reader could take this loss as the legal picture instead of one side of a live fight. Left-leaning coverage at CNBC reports that the 3rd Circuit said the CFTC has the exclusive right to regulate all swaps, and that New Jersey has already petitioned the Supreme Court. The NY Post account of the 6th Circuit ruling never mentions that contrary decision or the petition.
Right-leaning coverage flags sports bets as Kalshi's "main cash cow" and then lingers on investors. Left-leaning coverage leads with whether states may treat the contracts as gambling.
What part of the federal definition of a swap did the judges say Kalshi's sports contracts failed to meet?
Bottom line
On the court fight itself, CNBC is simply more complete: it places Friday's 6th Circuit loss beside a 3rd Circuit ruling the other way. The NY Post never does.
The receipts — 6 facts one side's coverage lacks
- The 3rd Circuit ruled the CFTC has the exclusive right to regulate all swaps, no matter the contract type
- New Jersey petitioned the Supreme Court after the 3rd Circuit decision
- The 9th Circuit ruled last month that Nevada may regulate sports-related event contracts as sports bets, not swaps
- The 6th Circuit decision overturns a Tennessee district court ruling for Kalshi and reaffirms an Ohio district court ruling for the states
- The CFTC has sued nine states to defend exclusive regulation of event contracts
- Kalshi has been battling more than a dozen state lawsuits
The Left View
Left-leaning outlets framed Friday’s 6th Circuit decision as another legal blow to prediction-market platforms and confirmation that states may treat sports event contracts as gambling. CNBC highlighted Tennessee Attorney General Jonathan Skrmetti’s charge that Kalshi “attempted an end run around Tennessee law to avoid any of the rules or taxes associated with sports gambling” and his claim that sports wagering “can do a lot of harm.” Those sources also carried Kalshi spokesperson Dani Lever’s rebuttal that “a state-by-state patchwork doesn't work,” that “Courts can't agree on the basics,” and that Congress created “a single federal regulator with nationwide rules,” while noting the CFTC’s suits against nine states and a circuit split that may reach the Supreme Court.
The Right View
The New York Post framed the ruling as “one of its biggest legal blows yet” for Kalshi, whose sports contracts it called the company’s “main cash cow,” and as a possible end to the “light regulatory touch” the firm has enjoyed from the CFTC. It said the decision could force prediction markets to comply with state gaming regulators nationwide and “pave the way” for outright bans in large markets such as California that do not allow sports wagers. The Post quoted UNLV law professor Kathryn Rand saying judges may conclude that if a product “quacks like a duck, it looks like a duck, this is obviously a duck, and it ought to be regulated under state law. Period.” Coverage also noted Kalshi’s fights with more than a dozen states and Native American tribes, continued venture funding totaling $2.6 billion and talks of a $40 billion valuation, and investor hopes that Trump administration support could entrench the industry before a change in power.
Our Take (balanced)
The strongest argument for state regulation is that Kalshi’s sports event contracts function like sports bets regardless of labeling: the 6th Circuit found they do not meet the statutory definition of a “swap,” and Tennessee’s attorney general cited an attempt to avoid gambling rules, taxes, and safeguards because sports wagering “can do a lot of harm.” The strongest argument for federal uniformity is that event contracts cannot operate under conflicting state regimes—Kalshi’s claim that “Markets can't operate when the rules change at every state line,” backed by the 3rd Circuit’s contrary holding that the CFTC has exclusive jurisdiction over all swaps. The central unresolved tension is whether these products are federally exclusive swaps or state-regulated gambling, a question on which the circuits now disagree and which the Supreme Court has not yet resolved.
3 sources
- Appeals court rules against Kalshi, says prediction markets can be regulated like gambling
- Appeals court rules that states can regulate Kalshi’s sports prediction markets, dealing another legal blow to platforms
- Kalshi subject to state gambling laws, appeals court finds — major blow to prediction market giant
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