NASHVILLE, Tenn. (WTVF) — Tennessee Attorney General Jonathan Skrmetti is asking a federal appeals court to let the state keep regulating sports betting tied to prediction market company KalshiEX LLC.
In a filing with the U.S. Court of Appeals for the Sixth Circuit, Skrmetti’s office argued Kalshi’s sports event contracts are essentially sports betting and should follow the same Tennessee laws that apply to sportsbooks like FanDuel, DraftKings and BetMGM.
Kalshi runs an online platform where users can place trades tied to sports outcomes, including who wins games, how players perform and whether teams cover the spread.
But Kalshi argues its products are not sports bets. Instead, the company says they are federally regulated financial products known as “swaps,” which would place them under the authority of the Commodity Futures Trading Commission, or CFTC, rather than state gambling regulators.
Tennessee disagrees.
In its appeal, the state argued the federal laws Kalshi relies on were created after the 2008 financial crisis to regulate complicated Wall Street-style financial products — not sports wagering.
“Kalshi can call their bets ‘swaps’ all they want, but everyone who so much as glances at the platform understands that this is sports gambling,” Skrmetti said in a statement announcing the appeal.
The case is part of a growing legal fight happening across the country over prediction market platforms and whether they should be regulated like financial exchanges or sportsbooks.
Kalshi has filed lawsuits in several states after regulators tried to block or restrict its sports-related contracts. In Utah, for example, state officials argued the products amount to sports gambling, while Kalshi maintained federal regulators have exclusive authority over the platform.
Courts around the country have reached mixed conclusions so far.
According to a recent legal analysis published by law firm Womble Bond Dickinson, early rulings in Tennessee and New Jersey favored Kalshi, while courts in Nevada, Ohio and Maryland have been more skeptical of the company’s argument that the contracts qualify as federally protected swaps.
The issue is also drawing attention in Congress.
A bipartisan bill introduced March 23, 2026, called the “Prediction Markets Are Gambling Act,” would ban sports and casino-style event contracts on federally regulated prediction market platforms. The bill is still in the early stages of the legislative process and has been referred to committee.
Tennessee’s appeal now asks the Sixth Circuit to decide whether the state can continue enforcing its sports betting laws while the broader national fight over prediction markets plays out.
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