Kalshi loses again as judges rule prediction markets must obey gambling laws

Another federal appeals court has ruled that states can enforce their gambling laws against the prediction market Kalshi, which asserts that it can only be regulated by the US government. On Friday, a three-judge panel in the US Court of Appeals for the Sixth Circuit ruled unanimously against Kalshi and in favor of Ohio and Tennessee.

While the US Commodity Futures Trading Commission has exclusive jurisdiction over "swaps," the judges found that sports wagers offered on Kalshi do not meet the legal definition of swaps. Moreover, the court found that even if Kalshi wagers were swaps, the regulatory scheme created by Congress would not prohibit states from enforcing gambling laws on prediction markets.

"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,'" said the ruling written by Judge Julia Smith Gibbons, a George W. Bush appointee. "And, even assuming that Kalshi’s sports-event contracts are swaps, we alternatively hold that the CEA [Commodity Exchange Act] neither expressly nor impliedly preempts Ohio’s or Tennessee’s gambling laws."

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