Meta description: The Sixth Circuit ruled against Kalshi in Tennessee and Ohio sports-contract cases, strengthening state gambling-law arguments.
Tags: Kalshi, Polymarket, Tennessee Sports Wagering Council, CFTC, Sixth Circuit, Sports Event Contracts
market_platform: none-if-cross-platform
category: Regulation
The U.S. Court of Appeals for the Sixth Circuit ruled on September 25, 2026, that Kalshi had not shown its sports event contracts were protected from Tennessee and Ohio gambling-law enforcement. The decision does not decide Polymarket’s legal status, but it strengthens the enforcement backdrop for sports prediction markets operating in states that treat game-outcome contracts as wagers.
The ruling lands in the middle of a broader fight over whether federally regulated event-contract exchanges can offer sports markets to retail users in states whose gambling regulators say the same products require state sports-wagering licenses. Tennessee has already taken that position against Kalshi, Polymarket and Crypto.com, according to January 9 cease-and-desist letters reported by CoinDesk and The Block.
That distinction matters for the prediction-markets industry because federal registration and state gambling enforcement are no longer moving on separate tracks. Platforms can point to Commodity Futures Trading Commission oversight. State agencies can point to consumer-facing sports markets that look, price and market themselves like betting products. The Sixth Circuit sided with the states in Kalshi’s Tennessee and Ohio cases, at least on Kalshi’s request to block enforcement.
What did the Sixth Circuit decide?
The Sixth Circuit rejected Kalshi’s attempt to stop Tennessee and Ohio regulators from enforcing state gambling laws against its sports event contracts. In the court’s September 25 opinion, Judge Julia Smith Gibbons wrote for the panel that Kalshi had not shown the contracts qualified as swaps under the Commodity Exchange Act.
The court stated: “We hold that Kalshi has not shown that its sports-event contracts satisfy the statutory definition of a ‘swap.'” That finding mattered because Kalshi’s preemption argument depended in part on the contracts falling inside the Commodity Exchange Act framework in a way that would limit state enforcement.
The panel also held that even if the contracts were swaps, Kalshi had not shown that the Commodity Exchange Act preempted Tennessee and Ohio gambling laws in the way the company argued. The opinion addressed Kalshi, not Polymarket, PredictIt, Manifold or any other prediction-market platform. Its practical significance is broader because sports event contracts across the industry raise the same legal question: when does a federally listed contract become a state-regulated sports wager?
The answer now depends heavily on jurisdiction. The Sixth Circuit covers Kentucky, Michigan, Ohio and Tennessee. Its ruling gives regulators in those states a stronger appellate precedent when contesting sports-event products. It does not automatically settle disputes in other circuits or decide the legality of every contract offered by every exchange.
What has Tennessee said about sports event contracts?
The Tennessee Sports Wagering Council sent cease-and-desist letters dated January 9, 2026, to Kalshi, Polymarket and Crypto.com, according to CoinDesk and The Block. The council said the companies were offering sports event contracts to Tennessee residents without a state license.
CoinDesk reported that the council told the companies to stop offering the contracts to Tennessee residents, void open contracts held by residents and refund deposits by January 31. The agency also warned of civil penalties of up to $25,000 per violation and possible criminal referrals for aggravated gambling promotion.
The council’s position was direct: sports event contracts tied to game outcomes were wagers under Tennessee law, and federal registration with the CFTC did not replace the need for a Tennessee sports-gaming license. Kalshi responded by suing Tennessee in federal court. The Sixth Circuit decision came out of that litigation and a related Ohio dispute.
For Polymarket, the Tennessee letter is part of the enforcement record, but the Sixth Circuit ruling itself was not a Polymarket case. That makes the decision influential rather than dispositive for Polymarket US. It tells state regulators how one federal appeals court viewed Kalshi’s arguments, but it does not issue a platform-specific order against Polymarket.
How does Polymarket US fit into the federal framework?
Polymarket US operates through QCX LLC, a CFTC-licensed designated contract market that Polymarket acquired in July 2025 along with QC Clearing LLC. On November 25, 2025, Polymarket announced through PR Newswire that the CFTC had approved an amended order of designation for QCX.
According to Polymarket’s announcement, the amended order allowed QCX to onboard customers and brokerages directly and offer intermediated access through futures commission merchants. Founder and CEO Shayne Coplan said in the release that the approval allowed the company to operate within the U.S. regulatory framework.
That federal status is central to Polymarket’s U.S. strategy, and to the prediction-market industry’s broader argument that event contracts belong under commodities regulation rather than state-by-state gambling regimes. But state regulators are not conceding the field. Tennessee’s January letters show that agencies can still treat sports-linked event contracts as gambling products when offered to residents.
The legal issue is not whether CFTC registration exists. It is whether that registration prevents a state from applying gambling law to sports contracts that resemble moneyline, spread or total wagers. The Sixth Circuit answered that question against Kalshi in the Tennessee and Ohio litigation.
Are courts split on state gambling-law preemption?
Yes. The appellate map is fragmented. The Sixth Circuit ruled against Kalshi in the Tennessee and Ohio cases. The Ninth Circuit also ruled against Kalshi in litigation involving Nevada regulators. The Third Circuit reached a different result in a New Jersey case, holding that New Jersey’s gambling laws were preempted as applied to Kalshi.
That split is the industry’s central legal problem. A platform can face one federal rulebook for listing contracts and several state enforcement theories for marketing or offering those contracts to retail users. Until the Supreme Court or Congress resolves the conflict, exchanges and state regulators will keep litigating the boundary between commodities law and gambling law.
The conflict is especially sharp for sports because the products map onto familiar betting categories. A contract on whether a team will win, cover a spread or push a total may be structured as an event contract on a federally regulated exchange. To a state gambling regulator, the same product can look like a sports wager offered outside the licensed sportsbook system.
Why does this matter for sports-media promotions?
Sports-media promotion matters because customer acquisition can be evidence of how a product is being offered to residents in contested states. Publishers have advertised prediction-market sign-up incentives to betting-adjacent audiences, including Polymarket US codes and Kalshi promotions. Those ads do not resolve whether the underlying products are lawful in a given state.
CBS Sports has advertised a Polymarket US code, “CBSSPORTS,” with a $50 bonus tied to a $10 deposit. Sports Illustrated’s prediction-market promo page has advertised a Kalshi code, “SI60,” offering $60 after $25 in qualifying trades, and has listed Novig, ProphetX and FanDuel Predicts. Those examples show how event-contract platforms are being marketed alongside products familiar to sports bettors.
For regulators, that marketing context matters. A platform’s legal argument may be built around federal commodities law, but the user-facing pitch often emphasizes game lines, odds-like prices and sign-up bonuses. For exchanges, sports-media partnerships are a direct path to users who already understand spreads, totals and implied probabilities.
The risk sits in the gap between those two frames. The CFTC can license a designated contract market. A state agency can still argue that a promotion aimed at its residents is part of an illegal sports-wagering operation if the product tracks game outcomes and lacks a state license.
What is the next legal milestone?
The next major milestone is whether Kalshi seeks Supreme Court review or pursues further appellate relief in the sports-contract cases. The split among the Third, Sixth and Ninth Circuits gives the issue the kind of posture that can draw high-court attention, but no single ruling now provides a national answer for every platform.
Until then, the market will operate under a patchwork. In Tennessee and Ohio, regulators have a fresh Sixth Circuit ruling supporting enforcement against Kalshi’s challenge. In New Jersey, Kalshi has a favorable Third Circuit ruling. Polymarket US remains tied to QCX’s federal CFTC status, while Tennessee’s January cease-and-desist position against Polymarket remains part of the state-level enforcement record.
For the prediction-markets industry, the practical point is narrow and important: federal market status does not end the state-law fight over sports contracts. The next material development will come from courts, regulators or a Supreme Court petition, not from promotional language attached to a football market.
