A federal appeals court has ruled that prediction-market company Kalshi cannot show its sports event contracts are beyond the reach of state gambling regulators, handing Ohio and Tennessee a significant win in the national fight over who governs betting that arrives by app.
The US Court of Appeals for the Sixth Circuit held that Kalshi could not demonstrate its sports contracts are swaps under the exclusive jurisdiction of federal regulators, and that even treating them as swaps, the federal Commodity Exchange Act does not preempt the gambling laws of Ohio or Tennessee, according to the decision summarised in Ohio's week-in-review reporting of the ruling. The panel included Judges Julia Smith Gibbons, Rachel Blooomkatz and Eric Clay, with Judge Gibbons writing.
Ohio Governor Mike DeWine, whose administration has enforced state gambling law against the platforms, welcomed the decision in remarks quoted in the same reporting, arguing in substance that relabelling gambling does not change what it is, and that operators who take bets in Ohio must follow Ohio law and pay Ohio's share.
The ruling does not end the national argument. Prediction markets have grown by presenting event contracts as financial products, and other circuits may read federal law differently, which would invite Supreme Court review. But for state casino control commissions and attorneys general, the Sixth Circuit has supplied the strongest appellate language yet that the statehouse, not a federal commodities regulator, polices sports betting inside state lines.
For bettors and operators alike, the practical rule in Ohio and Tennessee is now simple: state gambling law applies, licences and taxes included, unless and until a higher court says otherwise.
Operators now face a two-track America: states inside the Sixth Circuit where state gambling law plainly applies, and states where the federal question remains open. Expect licensing applications, tax registration and enforcement letters in Ohio and Tennessee to follow quickly, and expect the companies to test friendlier circuits, because a split among the circuits is the surest road to the Supreme Court.
Reporting is based on statements and reporting available at publication time. State News Journal checked the central facts against at least two reputable sources and attributes claims to their sources in the text. This story will be updated if confirmed new information materially changes the account, and corrections will follow the site corrections policy.
