Finance · updated 2h ago · 2 min read
6th Circuit Rules Against Kalshi, Lets Ohio And Tennessee Regulate Sports Prediction Markets
Sixth Circuit ruled Ohio and Tennessee can regulate Kalshi's sports event contracts under gambling laws. Kalshi's sports contracts are not swaps and not subject to CFTC exclusive jurisdiction.
Whether the ruling is a state win or an industry blow.
11 of 12 outlets skipped it: states sued/claimed access limits tied to Kalshi/Polymarket vary by state.
15outlets compared
Same story, two versions
tap a side to read it in full
Reuters
“Tennessee Attorney General Jonathan Skrmetti called the decision a ‘great win’ for his state.”Read the original ↗
New York Post
“dealing the prediction market giant one of its biggest legal blows yet.”Read the original ↗
Reuters and CNBC frame the ruling as a state-empowerment decision, while the New York Post calls it a major blow to Kalshi and the industry.
Court Blocks Kalshi
A unanimous three-judge panel of the 6th U.S. Circuit Court of Appeals ruled against prediction markets operator Kalshi on Friday, saying Ohio and Tennessee can regulate Kalshi’s so-called event contracts under their gambling laws.
Circuit Judge Julia Smith Gibbons wrote that Kalshi did not show its sports-event contracts satisfy the statutory definition of a "swap" so as to fall within the scope of the CFTC's "exclusive jurisdiction," and the panel also held that the federal Commodity Exchange Act did not preempt Ohio's or Tennessee's gambling laws.
Kalshi said it does not expect the decision to survive further legal review, and Kalshi spokesperson Dani Lever argued, "The ruling shows exactly why a state-by-state patchwork doesn't work."
The ruling vacated a preliminary injunction issued by a Tennessee federal judge against enforcement of that state's gambling laws and upheld the denial of a similar injunction against Ohio by a federal judge in that state.
States, CFTC, and Split
The 6th Circuit’s decision deepened a split among federal appeals courts over whether state regulators or the federal Commodity Futures Trading Commission should have authority to regulate the fast-growing industry. Reuters said the 9th Circuit in San Francisco ruled last month that Kalshi's event contracts are subject to Nevada's gambling laws, while the 3rd Circuit in Philadelphia said in April that Kalshi's contracts are not subject to New Jersey's gambling laws.R
The Reuters account also quoted Circuit Judge Julia Smith Gibbons saying, "Gambling regulation lies at the heart of the state's police power," and the judge added that Congress gave states primary responsibility to decide what forms of gambling can take place within their borders. RKalshi spokesperson Dani Lever framed the dispute as a problem of inconsistent rules, saying, "Markets can't operate when the rules change at every state line."
Supreme Court Stakes
The 6th Circuit ruling raised the potential that the U.S. Supreme Court may decide to settle the dispute over whether state gambling laws or the CFTC’s jurisdiction governs Kalshi’s sports-related event contracts.
Cointelegraph reported that US state lawmakers filed an amicus brief with the US Supreme Court through the National Council of Legislators from Gaming States (NCLGS), urging justices to weigh in on a case between Kalshi and gaming authorities.
Cointelegraph quoted the NCLGS arguing that a ruling favoring Kalshi would "[render] states powerless" to regulate sports betting on prediction markets, causing "substantial harm and confusion."
Cointelegraph also quoted a spokesperson for Kalshi saying it could not be "regulated by 50 different regulators," and the article said the company has until Nov. 9 to file a brief stating its position in the case.