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As of October 3, 2026, federal appeals courts have rejected Kalshi’s requests for preliminary relief in disputes over sports event contracts in Nevada, Ohio and Tennessee. The rulings are significant, but they do not establish a single nationwide answer: both addressed preliminary-injunction disputes, and neither makes a CFTC registration or product listing a blanket exemption from state gambling laws. The central questions are whether the specific contracts qualify as instruments covered by the Commodity Exchange Act (CEA) and, if they do, whether federal law displaces the state laws at issue.
What is legally being tested?
“Event contract” describes a type of market contract; it is not, by itself, a legal classification that decides which regulator or laws apply. The CFTC describes event contracts as derivatives that typically have binary payoffs tied to an event or occurrence. Its June 2026 proposal says they may fall within the CEA’s definition of a “swap” or may be futures, while also noting that the CEA and CFTC regulations do not define the term “event contract.”
That distinction matters because the disputes turn on statutory coverage and preemption, not simply on what a platform calls a product. A court must consider the contract and the applicable statutory definitions. In the cases below, Kalshi argued that federal commodities law placed its sports contracts under the CFTC’s exclusive jurisdiction and limited states’ ability to enforce gambling laws. The courts did not accept that argument as a basis for the preliminary relief Kalshi sought.
What the appellate courts decided
| Court and date | State dispute | Ruling and procedural result |
|---|---|---|
| Ninth Circuit, August 28, 2026 | Nevada; KalshiEX, LLC v. Assad | The court concluded that the sports event contracts in the case were not “swaps” under the relevant statutory provision and therefore were not subject to the CFTC’s exclusive jurisdiction. It affirmed dissolution of an injunction as to sports event contracts and remanded for consideration of election contracts. The opinion also said CFTC regulations then prohibited offering contracts related to gaming on prediction markets. |
| Sixth Circuit, September 25, 2026 | Ohio and Tennessee; KalshiEX LLC v. Schuler and KalshiEX LLC v. Orgel | The court held that Kalshi had not shown its sports contracts met the statutory definition of a “swap” within the CFTC’s exclusive jurisdiction. It also held, in the alternative, that even assuming the contracts were swaps, the CEA did not expressly or impliedly preempt the gambling laws at issue. It affirmed denial of a preliminary injunction in Ohio, vacated the Tennessee preliminary injunction and remanded. |
These are appellate decisions in specific state disputes, not a Supreme Court ruling resolving the question nationwide. Their procedural posture also matters: the courts were reviewing requests for preliminary injunctions, not issuing a single final judgment governing every sports contract, platform or state law.
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Why the dispute has two legal questions
1. Does the particular contract fall within the CEA?
The first issue is contract classification. The Ninth Circuit concluded that the sports contracts before it were not swaps under the relevant statutory provision. The Sixth Circuit likewise found that Kalshi had not shown its contracts satisfied the statutory definition of a swap. Those conclusions address the contracts and arguments in those cases; they should not be generalized into a ruling that every event contract has the same classification.
2. If it is covered, does federal law preempt state gambling law?
Classification does not necessarily end the analysis. The Sixth Circuit separately considered whether the CEA displaced the Ohio and Tennessee gambling laws even on the assumption that the contracts were swaps. It held that the laws at issue were not expressly or impliedly preempted. That alternative holding is important: a platform cannot resolve a state-law challenge merely by asserting that its product is a federally covered derivative.
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Why a CFTC listing does not settle the state-law question
The CFTC’s listed products are certified exchange products, and the agency describes prediction markets as registered designated contract markets or swap execution facilities offering event contracts. But the appellate opinions analyzed statutory definitions and preemption. A registration or product listing therefore does not, by itself, answer whether a particular sports contract is covered by the CEA or whether a state gambling law is displaced.
How the CFTC’s position changed in 2026
| Date | Agency action | What it means for readers |
|---|---|---|
| February 4, 2026 | The CFTC withdrew its 2024 proposed “Event Contracts” rule and said it did not intend to issue final rules based on that proposal. It also said staff had withdrawn the September 30, 2025 advisory on certain contract markets. | The 2024 proposal and 2025 staff advisory were withdrawn, not current final rules. CFTC Chairman Michael S. Selig said in the agency’s February 4 release: “While intended to highlight litigation considerations, the advisory inadvertently created confusion and uncertainty for our market participants.” |
| June 12, 2026 | The CFTC proposed new amendments concerning event-contract derivatives and the statutory public-interest determination process. | This is a proposed framework, not a final rule. It discusses how the agency could assess contracts involving listed activities such as gaming, including a structured review process. |
The June proposal identifies sport-level integrity arrangements and information sharing as potentially relevant considerations. It discusses whether a sport has a recognized governing body, monitoring functions, rules and disciplinary processes, and whether information-sharing arrangements may help address integrity concerns. These are factors in the agency’s proposed public-interest framework, not a declaration that every sports contract is lawful or available in every state.
What the rulings mean for platforms and consumers
The decisions show why a sports event contract should be assessed on its specific terms, legal classification and state context. The cited rulings concern Kalshi and the laws challenged in Nevada, Ohio and Tennessee. They do not decide the legal status of every provider or contract in every jurisdiction. The June CFTC proposal may shape the agency’s future review process, but it had not become a final rule as of October 3, 2026.
The CFTC’s customer guidance recommends reviewing a contract’s risks, fees and costs, trading rules, payout terms and the way settlement decisions are made. It also explains that a contract price reflects market participants’ perceived probability and that a customer may be able to trade out before settlement at the then-current market price. Those features do not guarantee a particular outcome or ensure that a contract is legally available to a particular customer.
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- Read the contract’s settlement and payout terms before trading; understand what event or determination triggers payment.
- Check the fees, costs and trading rules, including what happens if you try to exit before settlement.
- Verify that a website or mobile app is authentic. The CFTC advises checking links from the trading website rather than relying on an unverified app or link.
- Do not treat a platform’s description, registration status or product listing as a definitive answer to state-law questions.
Market scale and the next legal questions
The CFTC’s June 2026 proposed rule reported that total trading volume across CFTC-registered prediction markets exceeded $25 billion in 2025. That is the agency’s reported figure for that year, stated in a proposed rule; it does not establish the volume of sports contracts alone or settle their legal status.
The unresolved questions are practical as well as legal: how courts will apply statutory definitions to different contract designs, how other states’ laws will be treated, and whether the CFTC’s June proposal will be revised or finalized. The appellate rulings available by October 3, 2026, narrowed Kalshi’s arguments in the disputes before those courts, but they did not eliminate the need to assess each contract and jurisdiction on its own facts.
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