Share 
Bonus TL;DR
- Ohio Governor Mike DeWine confirmed that the state will actively enforce its gambling laws against prediction market operator Kalshi following a major ruling by the U.S. Sixth Circuit Court of Appeals, which rejected the company’s argument that its sports-event contracts are shielded by federal commodities law.
- The unanimous appellate decision, which also overturned a previous injunction favoring Kalshi in a similar Tennessee case, bolsters state regulators who argue that the exchange’s federally regulated sports contracts operate as unlicensed sports betting and violate local gambling age restrictions.
Ohio Gov. Mike DeWine said the state will enforce its gambling laws against Kalshi after the U.S. Sixth Circuit Court of Appeals ruled the company’s sports-event contracts are not shielded from state regulation by federal commodities law.
The decision is a significant setback for Kalshi’s argument that its sports-related event contracts fall exclusively under federal oversight. It also gives Ohio regulators stronger footing as they pursue action against the federally regulated exchange over products the state says amount to unlicensed sports wagering.
Sixth Circuit sides with Ohio and Tennessee
According to the ruling, the Sixth Circuit unanimously affirmed an Ohio federal district court decision denying Kalshi’s request to block enforcement of Ohio gambling law. The appeals court also overturned a preliminary injunction that had favored Kalshi in a separate Tennessee case.
Judge Julia Smith Gibbons wrote that Kalshi had not shown its sports-event contracts meet the federal statutory definition of a swap. The court also said Kalshi had not shown that the Commodity Exchange Act prevents Ohio and Tennessee from enforcing their gambling laws.
The case now returns to the lower courts for further proceedings.
DeWine made clear Ohio plans to press ahead. “These so-called prediction markets, which are really gambling, nothing more than that, they’re just trying to get around the law, don’t want to play by the same rules everybody else does,” he said.
He added: “They just wanna have a free ride. We will certainly enforce the law.”
Why Ohio regulators challenged Kalshi
Ohio regulators, including the Ohio Casino Control Commission, had previously sent Kalshi a cease-and-desist letter alleging it was offering sports gaming without a license. The commission also raised concerns that people under Ohio’s legal gambling age could access the contracts.
Under Ohio law, participants in sports gaming must be at least 21.
Kalshi has argued that it operates a federally regulated derivatives exchange and that its event contracts are financial derivatives overseen by the Commodity Futures Trading Commission. Ohio regulators, by contrast, say the sports contracts are functionally sports wagers and therefore fall under the state’s sports-gaming rules.
Kalshi said it plans to continue fighting the case. Spokesperson Dani Lever said, “We disagree with this decision and don’t believe it will survive further review.”
Lever also said, “Markets can’t operate when the rules change at every state line, which is why Congress created a single federal regulator with nationwide rules.”
The ruling could carry broader implications for prediction markets, as the dispute adds to an emerging split among federal appeals courts over how sports-event contracts should be regulated.
Source: As reported by news.google.com.
