A US appeals court rules against Kalshi on Friday, allowing states to regulate the company’s sports-related “event contracts” under gambling laws. The decision comes from the 6th U.S. Circuit Court of Appeals, which sides with Ohio and Tennessee in their efforts to treat Kalshi’s offerings as subject to state oversight.
The panel’s ruling centers on how the contracts should be classified. Outlets report the court finds Kalshi does not show the contracts are “swaps,” a type of financial instrument that would typically fall under federal regulation. Because the court determines the contracts are not swaps, it concludes that federal oversight does not preempt states from applying their gambling frameworks.
Several sources also place the ruling in a broader legal landscape affecting the prediction market industry. CNBC and others note it is part of a recent pattern of appeals court decisions that recognize states’ authority to regulate sports-related event contracts, creating additional legal pressure and uncertainty for prediction market platforms operating across state lines.
