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      Kalshi Faces Legal Challenges Over Sports Prediction Contracts

      Kalshi, a prediction market regulated by the Commodity Futures Trading Commission (CFTC), is currently embroiled in legal disputes regarding its sports contracts. A recent ruling by the U.S. Court of Appeals for the Sixth Circuit on September 25, 2026, allows Ohio and Tennessee to enforce their gambling laws against Kalshi's sports-event contracts. This decision follows a similar loss for the company in the Ninth Circuit, which ruled against Kalshi regarding its operations in Nevada.

      Kalshi argues that its contracts should be regulated at the federal level, asserting that state gambling laws should not apply due to its oversight by the CFTC. However, the Sixth Circuit rejected this argument, stating that Kalshi's sports contracts do not qualify as “swaps” under the Commodity Exchange Act and that federal law does not preempt state gambling regulations. This ruling adds to a growing divide among federal appeals courts, with the Third Circuit previously siding with Kalshi in a case involving New Jersey.

      The legal landscape for Kalshi is complicated by the involvement of over 20 states in litigation concerning its offerings. The differing rulings among the Third, Sixth, and Ninth Circuits raise the possibility of the U.S. Supreme Court eventually addressing the issue. Meanwhile, Kalshi has implemented geofencing measures to comply with state laws, restricting access to its sports contracts in states where local gambling regulations apply. This situation underscores a broader legal question about whether sports-related event contracts can be governed solely by federal law or if states retain their authority over gambling.

      © 2026 KLEA News. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

      Source: KLEA News

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