Kalshi loses appeal, setting up potential Supreme Court case
Prediction market Kalshi loses appeal setting up a potential Supreme Court fight after the 6th US Circuit Court of Appeals ruled Friday that Ohio and Tennessee may regulate its sports-event contracts under state gambling laws, finding the contracts are not CFTC-supervised “swaps.”
Key Takeaways
- A three-judge 6th Circuit panel unanimously sided with Ohio and Tennessee against Kalshi on Friday.
- Judges said Kalshi failed to show its sports-event contracts are “swaps” under Commodity Futures Trading Commission jurisdiction.
- The ruling echoes a 9th Circuit decision last month and contrasts with a 3rd Circuit ruling in April favoring Kalshi in New Jersey.
- State lawmakers filed an amicus brief urging the Supreme Court to decide who regulates prediction markets.
- At stake is whether state gaming authorities or federal agencies control sports-event contracts.
What did the 6th Circuit decide about Kalshi?
According to Cointelegraph, the 6th US Circuit Court of Appeals ruled against prediction market Kalshi on Friday. A three-judge panel sided unanimously with Ohio and Tennessee on regulating sports-event contracts under state laws.
The court found Kalshi failed to demonstrate that its sports-event contracts are “swaps” under the jurisdiction of the Commodity Futures Trading Commission (CFTC). That finding means Ohio and Tennessee can regulate the contracts under their state gambling laws, rather than leaving them solely to federal CFTC oversight.
How does this ruling fit with other circuit courts?
The decision follows a similar finding from the 9th Circuit Court of Appeals last month. That ruling broke from an April decision by the 3rd Circuit Court of Appeals, which allowed Kalshi to do business in New Jersey as its appeal process proceeds.
The April ruling said Kalshi was likely to succeed with its argument that federal law preempts New Jersey’s regulations. All of that conflict has set up a potential Supreme Court case, and it raises the stakes for platforms and traders following regulation in Fintech & Crypto Alerts.
Could the Supreme Court take up Kalshi’s case?
Cointelegraph reported on Wednesday that a group of state lawmakers filed an amicus brief with the Supreme Court. The brief urges the court to weigh in on the case between Kalshi and state gaming authorities.
Lawmakers want the justices to resolve whether state authorities or federal agencies have jurisdiction over prediction market companies. Kalshi’s loss in the 6th Circuit, stacked with the 9th Circuit’s similar finding, keeps that federal-versus-state fight firmly on the national docket.