Kalshi wants the full Sixth Circuit to rehear the September 25 ruling that let Ohio and Tennessee enforce gambling laws against its sports contracts.
Kalshi filed a petition on October 9 asking the full Sixth Circuit for a rehearing. The September 25 decision it wants reheard let Ohio and Tennessee enforce their gambling laws against its sports contracts. The document is titled a Petition for Rehearing and Rehearing En Banc. It is filed under case numbers 26-3196 and 26-5235. It closes by asking the court for "rehearing or rehearing en banc."
The answer decides more than who can take a bet on a football game. It decides whether an exchange with a federal licence answers to Washington or to 50 state regulators. Kalshi lists its event contracts on a designated contract market, a federal venue. It says it has operated there since completing the process in 2020. Its argument is that federal commodities law leaves states no room to ban what trades there. If the panel's reading stands, each state writes its own rules for those venues.
Circuit Judges Clay, Gibbons and Bloomekatz heard argument on July 30. They decided the appeal on September 25. The panel first held that sports-event contracts are not "swaps." Sports outcomes are not "inherently" connected to a financial, economic or commercial consequence, the panel reasoned.
It then went further, and this is the part Kalshi is fighting. Kalshi says the panel held that the Commodity Exchange Act's grant of exclusive jurisdiction is "actually concurrent, permitting 50 different states to regulate DCMs." It also says the panel held the contracts cannot trade on those venues at all, because they are not swaps. The petition also notes the panel refused to let the CFTC be heard at argument. It calls the agency "the federal agency whose jurisdiction is at stake."
On the facts of the two cases, the ruling went both ways. It affirmed an Ohio district court that had denied Kalshi relief. It reversed a Tennessee district court that found the contracts were swaps. That court also held the CEA preempts state gambling law as applied to DCM trading.
State regulators had moved first. The Ohio Casino Control Commission sent Kalshi a cease-and-desist letter in March 2025. The Tennessee Sports Wagering Council followed in January 2026.
It has been clear for 50 years that states cannot regulate trading on federal derivatives exchanges.
That is the sentence Kalshi's lawyers put near the top of the petition. They argue Congress gave the CFTC exclusive jurisdiction over contracts traded on designated exchanges. They say the September decision is irreconcilable with rulings from two other circuits.
The petition also spells out the wider cost of the panel's reading. It would criminalize the conduct of every DCM currently listing sports contracts, from Kalshi to the Chicago Mercantile Exchange. Whatever a reader thinks of prediction markets, the precedent here is not the sports bets. It is an exchange running under a federal designation and facing state criminal law.
The appeals courts have not settled on one answer. The Third Circuit ruled for Kalshi in its New Jersey fight. Kalshi has requested a rehearing before the full Ninth Circuit after losing in Nevada. New Jersey authorities are now seeking US Supreme Court review of the Third Circuit decision. Kalshi must respond to that petition by November 9, according to the court docket reported by the outlets covering the case.
The six-month scoreboard is roughly two circuits for the states and one for Kalshi. The company is asking for a full bench in Cincinnati and a full bench in San Francisco at the same time. In New York, the state sued the rival prediction market Polymarket in September, accusing it of running an illegal gambling operation.
Kalshi's petition cites two CFTC actions from October 9 as grounds for a new hearing. One is an interim final rule. It confirms that a swap does not include contracts regulated as gaming or gambling under state or tribal law and not traded on a board of trade. The agency said that rule takes effect on publication in the Federal Register.
The other is a proposed rule. It would fold event contracts based on sports, politics, cultural and weather events into the swap definition. Public comment is sought within 30 days of Federal Register publication. Casino-style gambling sits outside that definition under the interim rule, while exchange-traded event contracts would sit inside it.
Kalshi's argument is that this draws a legal line between contracts placed on an exchange and contracts placed with a standard bookmaker. CFTC Chairman Michael Selig is the lone commissioner on what is meant to be a five-member commission. He can set that policy without a vote.
For a holder, the practical question is whether a federal licence is worth anything if a state gaming board can still shut the product down. The next fixed date is November 9, when Kalshi must answer New Jersey's Supreme Court petition. Before that, the Sixth Circuit has to decide whether to take the case at all. A rehearing would put the September 25 holding in front of the full court. A different majority could rewrite the rule that currently governs Ohio and Tennessee.
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