US appeals court rules against Kalshi, says states can regulate prediction markets

A ​US appeals court ‌on Friday ​ruled against the prediction markets operator Kalshi, saying Ohio and Tennessee can regulate its ‌so-called event contracts under their gambling laws.

The decision by the 6th US Circuit Court of Appeals in Cincinnati deepens a split among federal ‌appeals courts over whether states or the federal Commodity Futures Trading Commission ‌has authority to regulate the fast-growing industry. Kalshi did not immediately respond to requests for comment.

Prediction markets are best known for letting people wager on ⁠the ​outcomes of sports ⁠events, though people can also wager on a wide variety of subjects ⁠including elections, the weather and cultural events such as the Oscars. Circuit Judge ​Julia Smith Gibbons wrote for a unanimous three-judge panel that Kalshi ⁠did not show that its sports event contracts were "swaps" that should be regulated ⁠exclusively ​by the CFTC. She also said the federal Commodity Exchange Act did not preempt Ohio's or Tennessee's gambling laws.

Many states ⁠including Ohio and Tennessee, which are both Republican-controlled, have sought to ⁠crack down ⁠on prediction markets, putting them at odds with Republican President Donald Trump's administration, as well as the CFTC.