The U.S. Court of Appeals for the 6th Circuit on Friday rejected Kalshi's appeal, ruling that Ohio and Tennessee have the authority to regulate sports event contracts under their respective gambling laws.

Three-Judge Panel: Kalshi Contracts Not CFTC 'Swaps'

A unanimous panel of three judges found that Kalshi failed to prove its sports event contracts are 'swaps' under the jurisdiction of the Commodity Futures Trading Commission (CFTC). This leaves regulation of such products to the states of Ohio and Tennessee.

Split Among Circuits: 9th Circuit Opposed, 3rd Circuit Allowed Operations in New Jersey

The 6th Circuit's decision follows a similar ruling by the 9th Circuit last month. However, in April, the 3rd Circuit allowed Kalshi to continue operating in New Jersey during its appeal, finding that the argument for federal law preemption over state rules is likely to succeed.

Lawmakers Ask Supreme Court to Decide Jurisdiction

On Wednesday, a group of state lawmakers filed an amicus brief with the U.S. Supreme Court, urging it to consider the dispute between Kalshi and state gambling regulators. A potential Supreme Court review could clarify whether federal agencies or state authorities have jurisdiction over prediction market companies.