CFTC Takes Prediction Market Fight to the Sixth Circuit — Where Courts Are Already Split

The Commodity Futures Trading Commission entered a new phase of its legal offensive on May 12, 2026, filing an amicus brief in the U.S. Court of Appeals for the Sixth Circuit on behalf of Kalshi — and against Ohio's efforts to shut down the platform's sports event contracts. The agency's argument is familiar: federal law governs these markets, not state gambling statutes. But the Sixth Circuit case carries a wrinkle none of the other appellate fights have: the same court's territory already contains one ruling for Kalshi and one ruling against it.

That internal contradiction — technically called an intra-circuit split — is now the center of gravity for the federal-versus-state prediction market battle. The CFTC wants the Sixth Circuit to resolve it by correcting what Chairman Michael S. Selig called "an improperly narrow view" of federal regulatory authority.

For traders, the case matters beyond Ohio. How the Sixth Circuit rules will shape whether a CFTC license actually functions as a national operating permit or whether states can selectively opt out.

The Ohio Case: A Timeline

Ohio moved against Kalshi in late 2024 and early 2025, with the Ohio Casino Control Commission (OCCC) issuing a cease-and-desist order directing the platform to stop offering sports event contracts in the state. The OCCC argued Kalshi was operating unlicensed sports betting under Ohio law — a position the platform rejected, citing its federal designation as a Designated Contract Market (DCM) under the Commodity Exchange Act (CEA).

Kalshi sued Ohio state officials in the U.S. District Court for the Southern District of Ohio in October 2025 (Case No. 2:25-cv-01165), seeking a preliminary injunction that would block the OCCC from enforcing its order while the case proceeded. The OCCC respondents include Executive Director Matthew T. Schuler, the case's named defendant.

In March 2026, Chief Judge Sarah D. Morrison denied Kalshi's motion. She rejected the argument that Congress had clearly intended the CEA's exclusive jurisdiction framework to override state sports gambling laws. The ruling was a significant setback — not because it resolved the underlying question definitively, but because it left Ohio free to enforce its restrictions while Kalshi appealed.

Kalshi filed its appeal to the Sixth Circuit on March 10, 2026. The Sixth Circuit expedited the briefing schedule and denied an emergency motion for an injunction pending appeal in April 2026, meaning Ohio's enforcement posture remained active during the litigation. Kalshi's opening brief was due May 5; Ohio's response is due June 4.

The CFTC's amicus brief filed May 12 is timed to hit the court during the active briefing window, directly reinforcing the preemption arguments Kalshi has already made.

The Intra-Circuit Split: Ohio Said No, Tennessee Said Yes

What makes the Sixth Circuit fight structurally different from any other appellate venue is that its own district courts have reached opposite conclusions on the same legal question.

In Tennessee, U.S. District Judge Aleta A. Trauger ruled in February 2026 that Kalshi's sports event contracts are federally regulated instruments and that Tennessee's sports wagering laws are preempted by the CEA. The Tennessee case (KalshiEx, LLC v. Orgel, No. 3:26-cv-00034, M.D. Tenn.) is also pending before the Sixth Circuit on appeal.

So the Sixth Circuit now has before it two cases from within its own territory — one where a district court said Kalshi is federally protected, and one where a district court said it isn't. That is a textbook intra-circuit split. Courts of appeals generally resolve these splits to create uniform law within the circuit. The question is which district court got it right.

Reuters reported in April 2026 that Kalshi "lost again in Ohio, but won in Tennessee, creating an intra-circuit split at the Sixth Circuit, where the cases are on appeal."

The CFTC's intervention positions the agency formally on the side that won in Tennessee. The agency told the Sixth Circuit that the Ohio district court's analysis was wrong and that federal preemption should be upheld.

What the CFTC Is Arguing

At the heart of the CFTC's legal theory is a reading of the Commodity Exchange Act that the agency has advanced consistently across every circuit: Kalshi's sports event contracts qualify as "swaps" under the CEA because their payouts depend on the occurrence or outcome of events with potential financial, economic, or commercial consequences. Sports games, the agency argues, generate billions of dollars in commercial activity and are routinely used by sportsbooks to hedge positions on DCM-listed contracts.

Because these contracts are swaps, and because the CEA grants the CFTC exclusive jurisdiction over swaps traded on designated contract markets, state law simply cannot apply to them. Allowing states to apply gambling statutes would destabilize national derivatives markets and create conflicting legal standards across the country.

Chairman Selig made the stakes explicit in a statement accompanying the filing: "The CFTC will not allow overzealous state governments to undermine the agency's longstanding authority over these markets." Earlier on the same day, speaking at the Financial Industry Regulatory Authority's annual conference, Selig said: "We have a federal framework for our markets, and that's there for a reason, because these markets cross state lines. You've got people trading across the country and you need a federal regulator for that."

The argument has a precedent anchor: in its Ninth Circuit amicus brief and in the Third Circuit case, the CFTC made substantially the same preemption argument. On April 6, 2026, the Third Circuit ruled 2-1 in Kalshi's favor in KalshiEX LLC v. Flaherty (No. 25-1922), becoming the first federal appeals court to affirmatively hold that the CEA preempts state laws that try to regulate trading on CFTC-licensed DCMs.

The Broader Appellate Map

The Sixth Circuit is the third federal appellate venue where the CFTC has formally weighed in since early 2026. That breadth reflects how far the legal fight has expanded beyond its origins.

Third Circuit (won): In KalshiEX LLC v. Flaherty, the Third Circuit ruled 2-1 on April 6, 2026, that the CEA preempts New Jersey's gambling laws as applied to Kalshi's sports event contracts. The court held that sports event contracts traded on a CFTC-licensed DCM are swaps subject to exclusive federal jurisdiction. This is the most favorable appellate ruling Kalshi has so far.

Ninth Circuit (pending): The Ninth Circuit heard consolidated oral arguments on April 16, 2026, in cases involving Kalshi, Robinhood, and Crypto.com against Nevada gaming regulators. The district court below ruled against all three platforms. If the Ninth Circuit affirms, a circuit split with the Third Circuit would exist — typically the condition the Supreme Court requires to accept a case.

Sixth Circuit (active, split internally): The Ohio case is on an expedited schedule, with briefing completing this summer. The CFTC's amicus brief filed May 12 is now part of the record. A ruling could come before year-end.

Fourth Circuit (pending): The Fourth Circuit has a Maryland case pending, with oral arguments scheduled for May 2026. The Maryland district court ruled against Kalshi.

Massachusetts SJC (CFTC amicus): The CFTC also filed an amicus brief in the Massachusetts Supreme Judicial Court, which heard arguments on May 4, 2026, in a case where the commonwealth is the plaintiff against Kalshi.

The pattern is clear: the CFTC under Chairman Selig is not waiting for courts to ask. The agency is injecting itself into every appellate proceeding it can reach, consistently arguing the same preemption theory. The goal is to create a record that no appeals court can call uncertain federal agency intent.

Neal Katyal and the Legal Strategy

Kalshi is represented in the Ohio case, and across multiple state fights, by Neal Katyal, who leads Milbank's U.S. Supreme Court practice and served as acting U.S. Solicitor General under President Obama. Reuters reported in February 2026 that Katyal is also representing Kalshi in its Nevada, Ohio, Maryland, Connecticut, and Tennessee cases.

The choice of Supreme Court-specialist counsel is itself a signal: Kalshi is building a record for certiorari. The structural conditions — conflicting district courts within the Sixth Circuit, a potential Third Circuit / Ninth Circuit split, and now a federal agency formally intervening — are precisely the conditions the Supreme Court looks for when deciding whether to take a case.

Prediction market traders currently price a meaningful probability that the Supreme Court will take up a sports event contract case before the end of 2026, based on active market data as of May 2026.

What This Means for Prediction Market Traders

If the Sixth Circuit rules in Kalshi's favor — resolving its internal split by following the Tennessee district court and the Third Circuit — Ohio's enforcement restrictions would likely be enjoined. Traders in Ohio who cannot currently access Kalshi's sports markets would gain access pending any further appeal.

If the Sixth Circuit rules against Kalshi, the split between circuits deepens: the Third Circuit would say yes to federal preemption, the Sixth would say no. That scenario almost certainly triggers a Supreme Court petition.

Either outcome matters beyond Ohio specifically. A uniform national rule — whether it comes from a Supreme Court ruling or a strong circuit consensus — is the only thing that gives prediction market platforms reliable operating certainty across all 50 states. Right now, whether a CFTC license is a national operating permit or a state-by-state negotiation depends on which federal courthouse you're standing in.

Frequently Asked Questions

What is an amicus brief and why does the CFTC file them? An amicus brief ("friend of the court") is filed by a non-party who has a legal interest in a case's outcome. The CFTC files them in prediction market cases because it wants appeals courts to resolve the federal-vs.-state question consistently with the agency's own reading of the CEA — and because CFTC backing signals to courts that this isn't just a private dispute between a company and a state, but a federal separation-of-powers question.

Is Ohio the only state that has sued or acted against prediction markets? No. Ohio is one of many. The CFTC has filed lawsuits against Arizona, Connecticut, Illinois, New York, and Wisconsin and secured a preliminary injunction in Arizona. Massachusetts, Maryland, Nevada, and others have pursued cases in their own courts. The Sixth Circuit's Ohio case is specifically about sports event contracts.

What is the intra-circuit split in the Sixth Circuit? The Sixth Circuit oversees federal courts in Ohio, Tennessee, Michigan, and Kentucky. A district court in Tennessee ruled that Kalshi's sports event contracts are federally preempted and granted an injunction. A district court in Ohio ruled the opposite. When the same appeals court gets conflicting rulings from courts within its own territory, it must resolve the contradiction. That is the intra-circuit split the CFTC is asking the Sixth Circuit to resolve in favor of preemption.

Does this affect Polymarket or other platforms? The legal questions being litigated — whether CFTC-regulated event contracts preempt state gambling laws — would apply to any platform with a federal CFTC designation. Kalshi is the primary litigant, but Polymarket (through QCX LLC) and Crypto.com (through CDNA) have similar federal regulatory status. Third Circuit Judge David Porter's ruling specifically noted that the Commodity Exchange Act preempts state laws that "purport to regulate sports-related event contracts on CFTC-licensed DCMs" — which covers any platform with that designation.

Where can I track the case status? The Sixth Circuit docket for KalshiEX LLC v. Matthew T. Schuler (Case No. 26-3196) is publicly available on CourtListener at courtlistener.com/docket/72451572/kalshiex-llc-v-matthew-schuler/.

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Sources & Verification

• CFTC Press Release 9230-26, May 12, 2026: CFTC Reaffirms Exclusive Jurisdiction Over Prediction Markets in Sixth Circuit Amicus Brief
• Chairman Selig quote: CFTC Press Release 9230-26 (cftc.gov) — verified May 13, 2026
• Sixth Circuit docket No. 26-3196: CourtListener — KalshiEX LLC v. Matthew Schuler
• Ohio/Tennessee intra-circuit split: Reuters, "Betting on the verdict: Kalshi case could shape prediction markets," April 6, 2026
• Third Circuit ruling: Reuters, "New Jersey cannot regulate Kalshi's prediction market, US appeals court rules," April 6, 2026
• CFTC sues five states: AP News, "Federal government sues three states over their regulation of prediction markets," April 2, 2026
• Arizona preliminary injunction: Reuters, "US judge blocks Arizona criminal case against Kalshi at CFTC's request," April 10, 2026
• Neal Katyal representing Kalshi: Reuters, "Kalshi bets on Neal Katyal in prediction market cases," February 26, 2026
• Sixth Circuit denied injunction pending appeal: Bloomberg Law, "Kalshi Unable to Stop Ohio From Enforcing Sports Gambling Laws," April 27, 2026
• Tennessee ruling context: Sportico, "U.S. Supreme Court Could Have Final Say on Sports Prediction Markets," February 26, 2026