Kalshi Loses Appeal as Court Upholds State Authority Over Sports-Event Contracts
The 6th US Circuit Court of Appeals ruled that Ohio and Tennessee may regulate prediction market contracts under state gambling laws.
Quick Look
- The 6th US Circuit Court of Appeals ruled that Ohio and Tennessee can regulate Kalshi's sports-event contracts under state gambling laws, rejecting the firm's claim that its products are federal swaps.
- The decision creates a split with other circuits, likely heading to the Supreme Court.
AI-generated summary
Why It Matters
The case centers on whether Kalshi's sports-event contracts qualify as 'swaps' under federal CFTC jurisdiction or as gambling subject to state laws. Conflicting rulings from the 3rd, 6th, and 9th circuits have created a legal split.
Prediction market Kalshi lost on appeal when a court ruled that Ohio and Tennessee can regulate sports-event contracts under their state gambling laws.
The 6th US Circuit Court of Appeals ruled against Kalshi on Friday when a three-judge panel sided unanimously with Ohio and Tennessee, finding that the prediction market failed to demonstrate its sports-event contracts are “swaps” under the jurisdiction of the Commodity Futures Trading Commission (CFTC).
The ruling followed a similar ruling from the 9th Circuit Court of Appeals last month, which broke from an April decision by the 3rd Circuit Court of Appeals allowing the company to do business in New Jersey as its appeal process proceeds.
The April ruling said Kalshi was likely to succeed with its argument that federal law preempts New Jersey’s regulations, all of which has set up a potential Supreme Court case.
Cointelegraph reported on Wednesday that a group of state lawmakers had filed an amicus brief with the Supreme Court, urging it to weigh in on the case between Kalshi and state gaming authorities, potentially resolving whether state authorities or federal agencies have jurisdiction over prediction market companies.
What to Watch
AI outlook — possibilities, not facts
Supreme Court review of jurisdiction between state and federal agencies.
Possible · Within months
Open Questions
- Will the Supreme Court accept the case to resolve the circuit split?
