Sixth Circuit: Kalshi contracts are not swaps; CEA does not preempt state gambling laws
A unanimous Sixth Circuit panel on September 25, 2026 refused to block Ohio and Tennessee gambling enforcement against KalshiEX's sports-event contracts, deepening a split on CFTC swap jurisdiction and CEA preemption.
On September 25, 2026, a unanimous Sixth Circuit panel declined to enjoin Ohio and Tennessee from enforcing their gambling statutes against KalshiEX LLC's sports-event contracts, in KalshiEX LLC v. Schuler. According to the reported summary, the panel held those contracts are not "swaps" under the Commodity Exchange Act and that the CEA does not preempt state gambling law — a ruling that deepens an acknowledged circuit split and narrows the federal pathway Kalshi relied on to operate nationally.
Why counsel should care: the decision sits at the intersection of CFTC jurisdiction, federal preemption and state gaming enforcement, and it shapes venue strategy for regulated-market clients, brokerage and clearing intermediaries, and leagues or event rights holders facing suit in multiple states. It also signals continued judicial pushback on treating consumer-facing event contracts as CFTC-registered derivatives.
Next steps: review event-contract exposure against state gaming and lottery licensing regimes; assess whether products must be wound down or restructured in the affected states; and watch for rehearing en banc, certiorari, or parallel litigation elsewhere. Only a secondary summary was available here, so the precise scope of the holding should be confirmed against the opinion itself.