GoTycheA Sixth Circuit Court of Appeals panel ruled that prediction markets' sports-related events contracts are not swaps, and therefore aren't subject to federal regulatory oversight.
Another appeals court rules against prediction market provider Kalshi, says sports contracts are subject to state regulations
A Sixth Circuit Court of Appeals panel ruled that prediction markets' sports-related events contracts are not swaps, and therefore aren't subject to federal regulatory oversight.
A panel of judges on the Sixth Circuit Court of Appeals ruled Friday that prediction market provider Kalshi's sports-related events contracts are not swaps, and therefore are subject to state gaming regulations rather than the federal Commodity Futures Trading Commission's rules.
It's the latest appeals court to weigh in on the ongoing legal fight between states and prediction market providers, and the ruling creates further reason for the U.S. Supreme Court to ultimately weigh in on the matter.
Friday's ruling addresses two cases brought by Kalshi against regulators in Ohio and Tennessee. The platform wanted to secure injunctions blocking the states from suing it, and while an Ohio federal court denied Kalshi's motion, a Tennessee federal court granted it.
States have tried to wrangle prediction markets offering sports-related contracts under their regulatory frameworks since they started taking off after the 2024 election, arguing that these markets are competing with state gambling platforms and offering identical products to gambling sites and apps. For many states, the issue is that federally regulated platforms do not pay state taxes, while still competing with state-regulated platforms. Another major point of contention is the fact that prediction markets often offer their products to people as young as 18, rather than 21, like most state gambling operators.
In Friday's ruling, the three-judge panel said it agreed that Kalshi did have the right to bring a case, but disagreed that the products in question were federally regulated swaps.
"While we agree with Kalshi that its sports-event contracts are conditioned on the occurrence of 'event[s],' we conclude that Kalshi’s contracts do not depend on events that are 'associated with a potential financial, economic, or commercial consequence' within the meaning of the statute," the ruling said.
The ruling used the New York Giants winning a Super Bowl as an example case, saying the result could depend on how the "event" in question is defined. If the event is the Giants winning, then that victory would be described as "that event having occurred."
Newsletters
On the other hand, if the event is actually the game being played, then the Giants winning is the outcome.
"The proper terminology, then, seems to turn on how the event itself is defined," the ruling said. "And because nothing in the statutory text provides a clear indication that the event must be defined to exclude outcomes, we decline to read such a limitation into the statutory definition ourselves."
The Third Circuit Court of Appeals and Eighth Circuit Court of Appeals had previously ruled on prediction markets, with the Third Circuit panel ruling that the CFTC had jurisdiction over prediction markets and the Eighth Circuit ruling that the sports-related contracts were not swaps. It's this type of circuit split that should lead to a Supreme Court case, and the Third Circuit case has already been appealed to the high court.
1Blockchain Association sees leadership shift shortly after crypto Clarity Act fizzles1 hour ago 2Circle and Tether step in to freeze hacker wallet after massive Bitget crypto heist7 hours ago 3Tokenization is moving faster than Washington7 hours ago 4Tether confirms minimal EQIBank exposure following $89M US asset seizure7 hours ago 5Strategy proposes daily dividends to bring STRC back toward $1007 hours ago 6Bond volatility surges while bitcoin and Wall Street stay calm9 hours ago 7Bitcoin holders are cashing out, just not the way they did at prior market tops10 hours ago 8Altcoins rally across the board as bitcoin consolidates near $84,00011 hours ago 9Bitcoin ETF flows turn positive for 2026 after erasing $5.8 billion deficit12 hours ago 10KelpDAO sues LayerZero for the largest exploit 2026 has seen so far12 hours ago
The Definitive Stablecoin Landscape Series: Asia Pacific
The Definitive Stablecoin Landscape Series: Asia Pacific
As stablecoins move into regulated finance, APAC is becoming a key proving ground. This report maps the region’s rules, use cases, and RLUSD’s role.
As stablecoins move into regulated finance, APAC is becoming a key proving ground. This report maps the region’s rules, use cases, and RLUSD’s role.
Why it matters:
As stablecoins move into regulated finance, APAC is becoming a key proving ground. This report maps the region’s rules, use cases, and RLUSD’s role.
Blockchain Association sees leadership shift shortly after crypto Clarity Act fizzles
Tether confirms minimal EQIBank exposure following $89M US asset seizure
New York sues Polymarket, alleging it is running an illegal gambling operation