Sixth Circuit Rules Against Kalshi as Brazil Shuts Down Betting Market

A US federal appeals court has dealt prediction-market operator Kalshi another legal setback, ruling that its sports-event contracts fall outside federal commodities law and can be regulated as gambling by individual states. The decision, from the Sixth Circuit, arrived the same weekend Brazil’s government moved to shut down its entire regulated online betting market, according to Gambling Insider.

Sixth Circuit sides with Ohio, rejects Tennessee injunction

The Sixth Circuit consolidated appeals from Ohio and Tennessee, where lower courts had split on Kalshi’s sports-event contracts. Tennessee had granted the company a preliminary injunction in February; Ohio had denied one.

The panel affirmed Ohio’s decision and vacated Tennessee’s injunction. “We hold that Kalshi’s sports-event contracts do not constitute swaps as defined in the CEA and thus do not fall within the scope of the CFTC’s exclusive jurisdiction,” the court wrote, according to Gambling Insider.

Judges also rejected an argument that federal law separates a sporting event from its outcome, noting it would be “reasonable to describe the Giants winning the Super Bowl as both an occurrence and an outcome.” Even if the contracts were swaps, the court added, federal law would not override state gambling statutes. “We thus conclude that conflict preemption does not block the States’ gaming laws,” it said.

The ruling puts the Sixth Circuit alongside the Ninth, which reached a similar conclusion in separate cases, though its reasoning diverged in parts. The Third Circuit had previously ruled in Kalshi’s favour in New Jersey, leaving a patchwork of outcomes across US jurisdictions.

Separately, the CFTC told the Ninth Circuit in a Sept. 24 filing that revised federal rules for event contracts could be finalized within two months. Kalshi has since asked both the Ninth and Fourth circuits to pause pending decisions until that rulemaking is complete.

Brazil halts regulated betting days before election

Brazilian President Luiz Inácio Lula da Silva signed a provisional measure banning all sports betting and online casinos, effective immediately. Congress has 120 days to ratify the order or it lapses.

Deposits have already stopped, and bettors must withdraw remaining funds by Oct. 5. Existing operator licences are set to terminate after a 30-day transition window, according to Gambling Insider.

Lula framed the move around household debt and public health, citing polling that suggests roughly 75 percent of Brazilians support a ban. The decision lands a week before Brazil’s Oct. 4 presidential election, where Lula faces Senator Flávio Bolsonaro, who has called the timing politically motivated.

Brazil’s regulated market launched in 2025 and quickly grew into one of the largest betting jurisdictions globally. Operator Entain said the ban could materially affect its net gaming revenue.

Why it matters for Canadian operators

Ontario’s single-operator model has largely kept prediction markets like Kalshi off provincial shelves, but the US legal fight over whether such products count as commodities trading or gambling continues to shape how regulators worldwide draw that line. iGaming Ontario requires all licensed operators to offer deposit limits, time-outs and self-exclusion tools, protections that remain untested against unregulated prediction-market platforms.

Brazil’s abrupt reversal also serves as a reminder that newly regulated markets can be politically fragile. Ontario’s model, now in its fourth year, has avoided comparable upheaval, but the episode underscores how quickly a government can unwind a licensing framework once public pressure mounts.

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