In a significant setback for the prediction market industry, the 6th U.S. Circuit Court of Appeals ruled Friday that states have the authority to regulate platforms like Kalshi under gambling laws. The unanimous decision by the three-judge panel rejected the company’s argument that its contracts should be classified differently.
The court sided with the states of Ohio and Tennessee, finding that Kalshi failed to demonstrate its sports-event contracts qualified as “swaps,” which are typically exempt from state gambling regulations and fall under federal oversight. The ruling marks the latest legal challenge for prediction market operators seeking to navigate the regulatory landscape across different jurisdictions.
Huge win for traditional regulators. Prediction markets just lost their federal shield in two more states.
Wait, so this means my fantasy football pools might technically be illegal now? Or is that a different category entirely?
Tennessee and Ohio were right to push back. We shouldn’t let offshore apps treat our state laws as suggestions.
Finally, some accountability. Allowing states to regulate these platforms makes sense for consumer protection.
Interesting ruling. This puts Kalshi in a tough spot, but does it affect non-sports prediction markets too?