Tennessee Wins Appeal in Major Sports Betting Fight with Kalshi

The U.S. Court of Appeals for the Sixth Circuit ruled in favor of Tennessee, rejecting Kalshi's claim that federal commodities law exempts its sports bets from Tennessee's laws. Kalshi is an online company offering sports bets without a Tennessee license. This decision lifts an order that previously blocked the State from enforcing those laws against the company. “This is a great win for Tennessee. Kalshi attempted an end run around Tennessee law to avoid any of the rules or taxes associated with sports gambling. They failed,” said Attorney General Jonathan Skrmetti. “Sports wagering is heavily regulated because it can do a lot of harm, and I’m glad we thwarted Kalshi’s efforts to remove every safeguard and put Tennessee sports bettors at risk. I’m proud of our outstanding team for defending Tennessee’s right to set its own rules.” Kalshi argued that its sports-event contracts are “swaps” under the federal Commodity Exchange Act, which would place them under the exclusive jurisdiction of the federal Commodity Futures Trading Commission and beyond state regulators’ reach. In a unanimous opinion, the Court rejected Kalshi’s argument, explaining that the federal law Kalshi relied on pertains to financial tools like interest rate contracts, which businesses use to manage real financial risk. It held that the contracts are not “swaps” because the underlying sporting events have no inherent financial consequence and added that Kalshi previously conceded its sports contracts carry no real economic value. The Court went further, holding that even if Kalshi’s contracts did count as federal financial products, Tennessee’s sports betting laws would still apply: Congress never said States were barred from regulating gambling, and nothing stops Kalshi from following both federal and state laws. The Sixth Circuit decided Tennessee’s appeal together with a parallel case from Ohio.