Kalshi wins Tennessee ruling; event contracts under CFTC

A U.S. court classified a Kalshi contract as a CFTC-regulated swap

A U.S. court has determined that a Kalshi contract is a Commodity Futures Trading Commission (CFTC)-regulated swap, according to Coinbase Chief Legal Officer Paul Grewal. The ruling reinforces that at least some event contracts can fall within federal derivatives oversight under the Commodity Exchange Act (CEA).

Why this matters: CFTC authority versus state gaming regulation

The core policy question is whether the CEA preempts state gaming laws when a designated contract market (DCM) lists event contracts that meet the statutory definition of a swap. Courts have signaled that DCM listing alone is not dispositive; judges are parsing whether each contract fits the statute.

Recent outcomes illustrate the split: a Tennessee federal judge ruled sports event contracts are swaps, while New Jersey granted a preliminary injunction allowing Kalshi to continue under a preemption theory (as reported by Casino.org and iGamingBusiness). Framing the issue as federal versus state jurisdiction, Grewal said, “prediction markets fall squarely under the jurisdiction of the CFTC, not any individual state gaming regulator.”

Practically, Kalshi and its users may experience state-by-state variability in market availability as litigation proceeds, even where a federal court has recognized a contract as a swap. Coinbase faces a fluid compliance map as it contests state restrictions while citing federal derivatives law.

Users should expect uneven access to specific markets depending on venue and contract design, especially around sports outcomes. At the time of this writing, Coinbase shares traded near $164.81 after hours, based on data from NasdaqGS; this pricing is contextual and not specific to any single ruling.

How courts are splitting on Kalshi event contracts

Commodity Exchange Act preemption versus state gaming laws

When a contract is a “swap” on a CFTC-regulated DCM, federal law can preempt conflicting state restrictions; however, states argue their gaming laws still apply to wagers. According to Axios, the CFTC has filed amicus briefs asserting its authority when state laws attempt to restrict event-contract trading, signaling a federal push for clarity.

Courts are responding differently, granting or denying injunctions based on their reading of the CEA and the nature of the underlying contingency. The result is a patchwork in which preemption may apply in one jurisdiction but not another.

Sports outcomes and the statutory swap definition

Judges are focusing on the statute’s requirement that swaps reference financial, economic, or commercial risks, not merely the occurrence of an event. According to Mondaq, Judge Andrew P. Gordon in Nevada concluded that contracts keyed solely to “which team wins” lack the necessary economic tie and therefore are not swaps.

By contrast, other courts have accepted that certain sports event contracts can qualify, indicating the analysis is contract-specific. The disagreement leaves sports-related event markets especially exposed to divergent state and federal interpretations.

FAQ about Kalshi event contracts

Does the Commodity Exchange Act preempt state gaming laws for prediction markets?

Sometimes. Courts are split, and preemption turns on whether the specific event contract qualifies as a swap under the CEA.

How did the Nevada and New Jersey rulings differ on Kalshi’s sports event contracts?

Nevada found win-loss sports contracts were not swaps; New Jersey granted a preliminary injunction supporting federal preemption, permitting Kalshi to continue, pending further review.