Kalshi Loses to Ohio and Tennessee in Sixth Circuit Ruling

The Sixth Circuit ruled on September 25, 2026 that Kalshi's sports-event contracts are not "swaps" under the Commodity Exchange Act, and that even if they were, federal law does not stop Ohio or Tennessee from enforcing their gambling statutes against the exchange. The court affirmed Ohio's win below and vacated the injunction Kalshi had won in Tennessee. It is the third federal appeals court to reach the merits of that question and the second to rule against Kalshi. The vacatur does not bind the Tennessee district court until the Sixth Circuit issues its mandate, which cannot happen before mid-October. And it does not move the October 9 closure deadline facing Michigan account holders.

The decision is KalshiEX LLC v. Schuler and KalshiEX LLC v. Orgel, Nos. 26-3196 and 26-5235, a published opinion filed September 25, 2026. Judge Julia Smith Gibbons wrote for a unanimous panel that also included Judges Clay and Bloomekatz. The court heard argument on July 30 and took just under two months. We downloaded and read the 49-page opinion in full, which is how we check everything we publish.

What did the court actually decide?

Two things, and the second one is the bigger of the two.

First, the narrow holding: Kalshi's contracts are not swaps. The panel read the statutory phrase "associated with a potential financial, economic, or commercial consequence" to require that "the event must be intrinsically associated with a financial consequence such that we can reasonably understand why hedging financial risk or ascertaining pricing information for the occurrence of that event would be desired and beneficial." Sports results do not clear that bar. Unlike contracts tied to interest rates or stock prices, the court wrote, Kalshi's sports-event contracts "have only downstream economic consequences, assuming they have the potential to cause economic consequences at all."

Second, the alternative holding, which does the real work: "even assuming that Kalshi's sports-event contracts are swaps, we alternatively hold that the CEA neither expressly nor impliedly preempts Ohio's or Tennessee's gambling laws." That is the part that survives whatever happens to the swap definition later. The panel leaned on the CEA's two savings clauses and on the "Special Rule" that lets the CFTC prohibit contracts involving gaming or activity unlawful under state law. Kalshi argued that rule gives the CFTC sole authority. The court disagreed: the rule "is better interpreted as a backstop," and the fact that it "expressly contemplates the CFTC looking to state law to determine whether to prohibit certain contracts indicates that Congress envisioned a role for the states in this process."

The panel also rejected the practical argument that complying with both regimes is impossible. Ohio requires wagers to be initiated, received and completed inside the state. Kalshi said geofencing is "technically challenging, time-consuming, and expensive." The court's answer was four words: "expensive does not mean impossible."

What happens now in Ohio and Tennessee?

Tennessee is where something moved on paper. Not yet on the ground.

The two cases were in opposite postures. The Southern District of Ohio had denied Kalshi an injunction, so the Ohio Casino Control Commission was never blocked. The Middle District of Tennessee had granted one in part, so the Tennessee Sports Wagering Council was. The Sixth Circuit's closing line is that it will "affirm the Southern District of Ohio's denial of Kalshi's motion for a preliminary injunction, vacate the Middle District of Tennessee's grant of Kalshi's motion, and remand for further proceedings consistent with this opinion."

Here is the part a reader should not skip. A court of appeals judgment does not reach the district court until the mandate issues, and the mandate has not issued in this case. The sequence from here is set by rule, not by either regulator:

1. September 25, 2026. The panel files its published opinion in both appeals.
2. 14 days from entry of judgment. Federal Rule of Appellate Procedure 40(a)(1) gives Kalshi that long to petition for panel rehearing or rehearing en banc.
3. Seven days after that window closes. Rule 41(b) then sends the mandate down, or seven days after any such petition is denied, whichever is later. The 45-day version of that deadline does not apply here because the United States is not a party; the CFTC appeared as an amicus.
4. Mid-October at the earliest. Until the mandate issues, the Tennessee injunction is still the operative order in the Middle District of Tennessee.

Kalshi did exactly this in the Ninth Circuit, petitioning for rehearing on September 9 after losing in August, which stopped that mandate too.

What the opinion does not do is order anyone to shut anything down. These are preliminary-injunction appeals, not final judgments, and the panel remanded "for further proceedings." Whether the TSWC moves once the mandate lands, and how fast, is a decision the opinion does not make. We have seen no enforcement action filed since the ruling.

Where does the Kalshi circuit split stand now?

Two circuits against, one for, one still to rule.

The opinion sets that split out itself, in footnote 3, naming the Third and Ninth Circuit decisions as having "ruled on substantially the same question presented here - reaching opposite results," and recording that "the appeal before the Fourth Circuit remains pending." That one is Kalshi's appeal against Maryland's gambling regulator, the case we set out when Baltimore sued Kalshi and Polymarket under the consumer-protection ordinance it had already aimed at six sweepstakes operators. Two other circuits have turned Kalshi down without reaching the merits: the Second Circuit refused it interim relief in the Connecticut appeal on August 19, and the Tenth Circuit denied an injunction pending appeal in Utah on September 8. Those were motions rulings, not decisions on whether the contracts are swaps, which is why the Sixth Circuit counts itself the third court to answer the question.

A genuine two-to-one circuit split on a federal preemption question is the classic setup for Supreme Court review, and New Jersey has already petitioned the Supreme Court on this exact issue. We are not going to predict what the Court does with it.

What does this ruling mean for sweepstakes casinos?

No sweeps balance moves today. What moved is the exit route: the same preemption theory some sweepstakes operators have been using to leave the model just got weaker.

The argument at the centre of this case is that a federal commodities registration lets a company offer wagering-shaped products in states whose own gambling laws forbid them. That is not an abstraction for this industry. Novig retired both its coin currencies and moved to a CFTC-designated exchange in August, trading the dual-currency sweepstakes model for exactly the federal shield the Sixth Circuit has now declined to recognise. A Washington state court reached the same conclusion about the Commodity Exchange Act in August. Any operator weighing that move is reading a materially worse set of odds after September 25 than it was before.

If you hold a Michigan position, does this move your deadline?

No. Not on the wording of the documents that set it.

Two Michigan stipulations are built around these appeals. Coinbase signed one on September 23 and Robinhood signed one on September 4, and both name the same four Sixth Circuit matters: the Robinhood Appeal, the Polymarket Appeal, the Coinbase Appeal, and "the Kalshi Appeals," which the documents define as Nos. 26-3196 and 26-5235, the two decided on September 25. We pulled both stipulations off the federal docket and read them.

The clause is explicit about what counts. Each company agrees to stop offering new Michigan sports-event contracts by its deadline "and until the first to occur of" either the dissolution of the Ingham County state-court injunction against Kalshi, or "the final resolution of" those four appeals "either by the Sixth Circuit or, if certiorari is sought, by denial of certiorari or a decision by the Supreme Court of the United States."

Three things follow from that wording. The parties wrote in the certiorari route themselves, so a Sixth Circuit opinion is the end of the line only where nobody goes to the Supreme Court, and New Jersey's pending petition shows how live that route is on this exact question. The Kalshi Appeals are one of four named matters and the other three are undecided, so this opinion does not resolve the Robinhood, Polymarket or Coinbase appeals. And nothing in the September 25 opinion dissolved the Ingham County injunction, which is the other exit the clause allows.

Then note where that escape hatch sits in each document, because it is narrower than it looks. In the Coinbase order it is attached to paragraph 2, the promise to stop offering new contracts. The obligation to close positions already open is paragraph 3, and it carries no such condition. Robinhood's document is built the same way: the release runs with paragraph 1, and the closure promise in paragraph 2 stands alone. So even a resolution that satisfied the clause tomorrow would reopen the ability to trade; it would not spare a position you are still holding on the night of the ninth.

So a Michigan account holder should plan on the dates as written: Coinbase closes every open Michigan position at 12:00 AM Eastern on October 10, which means the last evening to act is Friday, October 9, and Robinhood's book shuts at the same moment. Close it yourself rather than holding a position in the hope a court hands it back. Nothing here opens anything for sweepstakes casinos in Michigan either.

Does anything change for sweepstakes players in Ohio or Tennessee?

No. Nothing changed in either state on September 25. Sweepstakes casinos in Ohio still operate, and we track which ones are worth your time. Tennessee's sweepstakes casino ban is a different matter: the state banned the model outright, and this ruling is about sports-event contracts, not sweeps coins. If you are in Tennessee, the ban is still the thing that governs your account, and this ruling did not move it. Our guide to where sweepstakes casinos are legal sets out how the state categories differ, and the brands we have tested and ranked is the working list for everywhere that is still open.

Sources & documents

• Sixth Circuit published opinion, KalshiEX LLC v. Schuler / KalshiEX LLC v. Orgel, Nos. 26-3196/5235, filed September 25, 2026 (PDF)
• Sixth Circuit published-opinions index, showing the September 25, 2026 filing
• Stipulation and Order, Coinbase Financial Markets, Inc. v. Nessel, No. 4:25-cv-14092 (E.D. Mich.), entry 65, signed September 23, 2026 (PDF)
• Stipulation and Order, Robinhood Derivatives, LLC v. Nessel, No. 1:26-cv-00730 (W.D. Mich.), entry 50, filed September 4, 2026 (PDF)
• Federal Rule of Appellate Procedure 40, on the time to petition for rehearing
• Federal Rule of Appellate Procedure 41, on when the mandate issues

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