Appeals court divide puts sports contract oversight on uncertain footing

Federal appeals courts have taken conflicting positions on whether sports event contracts qualify as swaps under the Commodity Exchange Act, according to Foley and Lardner. The disagreement leaves Kalshi with a favorable ruling against New Jersey but opposing decisions in two other circuits.

Three circuits, competing conclusions

In KalshiEX v. Flaherty, the Third Circuit affirmed a preliminary injunction against New Jersey, according to Foley and Lardner. That decision backed Kalshi at the preliminary-injunction stage, rather than resolving the litigation in full.

The Ninth Circuit reached the opposite conclusion. The Sixth Circuit aligned with that position on September 25, 2026, in consolidated appeals involving Ohio and Tennessee, siding with the states.

Rehearing request keeps the dispute moving

Kalshi petitioned the Sixth Circuit for rehearing en banc on October 9, 2026, according to Foley and Lardner. The filing seeks reconsideration of the ruling; the provided summary does not identify an outcome for that request.

Foley and Lardner maintains a litigation tracker as the cases progress toward a possible Supreme Court test. That prospect remains a possibility, not a confirmed next step.

What it means for prediction markets

• Legal classification is central: The split concerns whether sports event contracts are swaps under the Commodity Exchange Act—a key issue in the competing federal and state positions.
• The rulings are not uniform: The Third Circuit’s support for Kalshi contrasts with the Ninth and Sixth Circuits’ decisions favoring the states.
• Procedure matters: The preliminary injunction and pending rehearing request should not be read as final nationwide resolution. The Sixth Circuit petition and any movement toward Supreme Court review are developments to watch.