Kalshi loses again as judges rule prediction markets must obey gambling laws
Kalshi's defiance of state gambling laws may be headed to Supreme Court.
A federal appeals court has ruled that states can enforce gambling laws against the prediction market Kalshi, despite the company's claim that only the federal government should regulate it. The three-judge panel in the US Court of Appeals for the Sixth Circuit unanimously sided with Ohio and Tennessee on Friday. While the US Commodity Futures Trading Commission holds exclusive jurisdiction over swaps, the judges determined that sports wagers on Kalshi do not qualify as swaps.
Even if they were considered swaps, the court concluded that Congress' regulatory scheme does not prevent states from enforcing gambling laws on prediction markets. In the judges' words, "We hold that Kalshi has not shown that its sports-event contracts satisfy the statutory definition of a swap so as to fall within the scope of the CFTC's exclusive jurisdiction."
Additionally, the court stated that the Commodity Exchange Act does not preempt Ohio's or Tennessee's gambling laws, either expressly or impliedly.
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