The Gambling Wire: Sixth Circuit Rules Against Kalshi as Brazil Bans Online Betting

Two major developments reshaped the regulatory landscape for sports betting and prediction markets, while fresh enforcement actions and legislation added to a busy weekend.

Kalshi suffered another major appellate defeat in its legal battles with Ohio and Tennessee, while Brazil abruptly moved to dismantle its regulated online betting market less than two years after launch.

Elsewhere, the CFTC said new sports-event contract rules could arrive within two months, Florida expanded its sweepstakes casino crackdown, and a sweeping Pennsylvania gambling bill proposed major changes to sports betting, iGaming and fantasy contests.

The Big Story: Sixth Circuit Deals Kalshi Another Appellate Loss

The Sixth Circuit ruled that Kalshi’s sports-event contracts are not swaps under federal commodities law.

The consolidated appeal brought together split rulings from the lower courts. A Tennessee court granted Kalshi a preliminary injunction against state officials in February, while an Ohio judge denied one.

The Sixth Circuit’s decision affirmed the Ohio ruling and vacated the Tennessee injunction.

For the foregoing reasons, 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 said.

With the decision, the Sixth Circuit aligned with the Ninth, which similarly ruled that sports event contracts are not swaps in two separate cases. However, the Sixth Circuit differed from the Ninth Circuit on a key part of its reasoning.

It rejected the argument that the CEA distinguishes between an event and its outcome. The panel said:

It would be reasonable to describe the Giants winning the Super Bowl as both an occurrence and an outcome.”

Instead, it found that sporting events are not intrinsically associated with the financial, economic or commercial consequences required under the CEA. The court also held that even if the contracts were swaps, the CEA would neither expressly nor impliedly preempt state gambling laws.

We thus conclude that conflict preemption does not block the States’ gaming laws,” the court said.

The decision leaves Kalshi with appellate losses in both the Sixth and Ninth circuits, while the Third Circuit previously sided with the company in New Jersey.

The Daily Wire

Brazil Moves to Shut Down Online Betting Market

Brazilian President Luiz Inácio Lula da Silva signed a provisional measure to ban all sports betting and online casinos. The measure took effect immediately, although Congress must approve it within 120 days to remain in force.

Bettors must withdraw available funds by Oct. 5, with deposits already stopped. Existing licenses are set to terminate after a 30-day transition period. Lula framed the move around household debt and public health concerns. Recent polls have suggested that around 75% of Brazilians support a ban.

The move comes a week before Brazil’s Oct. 4 presidential election, where Lula is seeking reelection against Sen. Flávio Bolsonaro. Bolsonaro has characterized the decision as politically motivated in public addresses.

The ban could be a significant financial hit to operators, with Brazil rapidly becoming one of the world’s largest betting jurisdictions since the regulated market’s launch in 2025.

Entain issued a statement saying the decision could significantly affect its net gaming revenue.

CFTC Says New Event Contract Rules Coming Within Two Months

The CFTC expects its revised event-contract regulation to become final within the next two months. The timetable was revealed in a Sept. 24 filing with the Ninth Circuit opposing Arizona’s request to have the injunction summarily vacated following the Court’s August decision against Kalshi.

The agency asked the court to either deny Arizona’s motion as premature or delay consideration pending issuance of the mandate in the cases.

Kalshi immediately used the development in its pending appellate fights.

In separate Sept. 25 filings, Kalshi urged both the Ninth and Fourth circuits to hold off on decisions while the CFTC completes its rulemaking. In both filings, the company argues that the new regulation would be directly related to its case and to the court’s analysis.

Florida Targets Social Media Ads for Sweepstakes Casinos

Florida Attorney General James Uthmeier has ordered major social media and technology companies to stop advertising sweepstakes casinos to Florida residents.

Uthmeier shared on X that he sent letters to Google, Meta, Reddit, Snap and TikTok, giving the companies until Oct. 23 to comply. The move follows lawsuits filed by Uthmeier’s office in August against sweepstakes operators Stake and VGW, the parent of several platforms, including Chumba Casino.

Pennsylvania Bill Proposes Sweeping Gambling Overhaul

Rep. Russ Diamond, Republican chair of the House Gaming Oversight Committee and four co-sponsors introduced HB 2801 on Sept. 24. The 161-page measure would overhaul sports betting, iGaming, fantasy contests, casino taxation, gaming revenue distributions and problem gambling provisions.

Among its most significant changes, HB 2801 would impose a 49.9% tax on peer-to-peer games, online table games and online slots, while increasing the sports betting tax from 34% to 36%.

The proposal would also explicitly prohibit dual-currency sweepstakes casinos and revise Pennsylvania’s fantasy contest definition to expressly accommodate pick ’em-style contests involving two or more athletes.

The bill has been referred to the House Gaming Oversight Committee. The Pennsylvania legislative session ends on Nov. 30, giving the bill two months to pass.

DraftKings Faces New Responsible Gambling Scrutiny

DraftKings is facing new scrutiny over its responsible gambling practices, just a week after a New York Times investigation revealed the operator’s use of AI to target customers likely to lose more after receiving promotions.

In a new ProPublica investigation, reporter Jake Pearson deliberately adopted behaviors associated with problem gambling to test DraftKings’ safeguards. After losing nearly $1,800 in one night while chasing losses, he received an invitation the following day to participate in the operator’s VIP program.

The ProPublica reporter ultimately deposited $21,600 in less than eight weeks and reported that DraftKings said his activity never triggered a manual account review.

AGA Study Suggests Gamblers Have Higher Financial Literacy Than Non-Gamblers

An American Gaming Association-commissioned study found that gamblers demonstrated higher financial literacy than non-gamblers, and that higher financial literacy was also associated with stronger responsible-play behaviors.

According to the study, gamblers scored an average of 3.93 out of five on a “widely used financial literacy index.” Meanwhile, non-gamblers scored 3.72. Also, 41% of gamblers qualified as highly financially literate, compared with 27% of non-gamblers.

Researchers found that casino players reported the strongest responsible gaming behaviors among all gambling segments.

Prediction market users stood out for a different reason. They reported nearly as much confidence in their mathematical abilities as sports bettors but performed closer to non-gamblers on objective numeracy tests.

Gambling/Prediction Market Developments to Watch This Week

The gambling industry’s attention turns to Las Vegas this week as G2E 2026 opens Monday at The Venetian Expo, with more than 25,000 gaming professionals expected to attend.

Prediction markets will be a major focus, including panels examining the industry’s response to their rapid expansion, alongside sessions covering AI, responsible gaming and the changing relationship between sports wagering, athletes and leagues.

Prediction-market litigation also remains busy. Kalshi returns to court Tuesday for a preliminary-injunction hearing in its Ohio state-court lawsuit, just days after the Sixth Circuit’s ruling. Kalshi’s opening brief in its Second Circuit appeal in its litigation with Connecticut is also due Wednesday.

The Sixth Circuit decision could quickly ripple into other pending cases, with state regulators potentially citing the ruling as supplemental authority. Further enforcement moves in Ohio and Tennessee will also be worth watching.

More filings and rulings are also highly likely. That includes New York possibly seeking to remand its newly removed Polymarket case back to state court.

Trading activity provides another benchmark. Prediction markets have repeatedly posted record sports volume during the opening weeks of the NFL season, making this weekend’s numbers another test of whether that growth can continue.

Outside prediction markets, operators’ responses to Brazil’s sudden betting ban will be closely watched, including potential changes to forecasts and guidance. The MLB playoffs also begin Tuesday with the Wild Card round, providing sportsbooks and prediction markets another potential source of betting volume alongside the NFL and college football.

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