Appeals court says Ohio and Tennessee can regulate Kalshi under gambling laws
The 6th Circuit said Ohio and Tennessee can apply gambling laws to Kalshi, deepening a split that may reach the Supreme Court.
A federal appeals court has ruled that Ohio and Tennessee can enforce their gambling laws on prediction markets, such as those operated by Kalshi. The 6th U.S. Circuit Court of Appeals in Cincinnati determined that the financial products involved in prediction markets do not fall under the Commodity Futures Trading Commission's (CFTC) jurisdiction.
Circuit Judge Julia Smith Gibbons stated that regulating gambling is a fundamental aspect of a state's police power, and the CFTC's laws do not supersede state gambling regulations. The ruling invalidates a preliminary injunction that prevented Tennessee from applying its gambling laws to Kalshi. The decision also sustains a lower court's refusal to grant Kalshi a similar injunction in Ohio.
Tennessee's Attorney General welcomed the ruling as a "great win" for the state. Kalshi has indicated its intention to appeal the decision. The unanimous ruling adds to the ongoing debate among federal appeals courts regarding the regulation of the rapidly expanding prediction markets industry - whether it should be overseen by individual states or the CFTC.
Such splits in appellate court jurisdiction often increase the likelihood of Supreme Court intervention, though there is no guarantee. Similar litigation is currently ongoing in Connecticut, New York, Arizona, and Minnesota.
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