Sixth Circuit holds the CEA would not preempt Ohio and Tennessee gambling law even if Kalshi's sports contracts were swaps
On 25 September 2026 the U.S. Court of Appeals for the Sixth Circuit, in a consolidated opinion in KalshiEX LLC v. Schuler (No. 26-3196) and KalshiEX LLC v. Orgel (No. 26-5235), affirmed an Ohio federal court's refusal to grant KalshiEX LLC a preliminary injunction, vacated the preliminary injunction a Tennessee federal court had granted it, and remanded both cases. Writing for the panel, with no separate opinion filed, Judge Gibbons held that Kalshi had not shown its sports-event contracts are likely 'swaps' under the Commodity Exchange Act. To qualify, the court held, an event must be inherently associated with a financial, economic or commercial consequence, so that hedging or price discovery on it would be commonly understood as beneficial; effects on sponsors, broadcasters and franchises are, in its words, 'too attenuated, indirect, and speculative'.
The alternative holding carries more weight. Even assuming the contracts are swaps, the panel held that the Act neither expressly nor impliedly preempts Ohio's or Tennessee's gambling laws. The CFTC's 'exclusive jurisdiction', it reasoned, displaces only direct regulatory and enforcement authority over the licensing and operation of designated contract markets, which gambling laws burden only incidentally. It rejected field, impossibility and obstacle preemption, and read the statute's Special Rule on gaming contracts as a backstop that supplements state law. It applied the presumption against preemption 'with particular force', noting that the Ninth Circuit in Assad (Signal 019) had declined to apply any presumption. The Third Circuit in Flaherty held the contracts are swaps and found preemption; in the Sixth Circuit, even that premise would not carry Kalshi.
The test reaches beyond the contracts at issue: the court's own examples — parlays, corner-kick counts, whether a broadcaster says a given word — describe a category. At circuit level the count is now two to one against Kalshi; the split was first logged here in August (Signal 019), and the Fourth Circuit appeal (No. 25-1892) is pending. Every ruling is at the preliminary-injunction stage and turns on likelihood of success; the panel did not reach irreparable harm or the equities. For operators, the posture is this: in Ohio no injunction was ever in place, and in Tennessee the injunction falls away once the court's mandate issues, which a petition for rehearing would delay. The record also recites that the Ohio Casino Control Commission had already told its own sportsbook licensees it would take administrative action against any that associated with a company it considered to be operating illegally in Ohio.