Kalshi loses appeal as states win sports contract case
The 6th US Circuit Court of Appeals sided with Ohio and Tennessee, ruling they can regulate Kalshi's sports-event contracts under state gambling laws.
Key points
- A three-judge panel of the 6th US Circuit Court of Appeals ruled unanimously against Kalshi on Friday.
- The court found Kalshi did not show its sports-event contracts are swaps under CFTC jurisdiction.
- The 9th Circuit ruled similarly last month, breaking with an April 3rd Circuit decision favouring Kalshi in New Jersey.
- State lawmakers have filed an amicus brief urging the Supreme Court to take up the dispute.
- The split between circuits raises the prospect of a Supreme Court case on prediction market jurisdiction.
Kalshi lost its appeal on Friday when the 6th US Circuit Court of Appeals ruled that Ohio and Tennessee can regulate its sports-event contracts under their state gambling laws, CoinTelegraph reports. A three-judge panel sided unanimously with the two states.
The court found that the prediction market failed to show its sports-event contracts qualify as swaps, which would place them under the jurisdiction of the Commodity Futures Trading Commission. The decision hands the states a win in their effort to apply their own gambling rules to the company's offerings.
The ruling follows a similar outcome at the 9th Circuit Court of Appeals last month. That decision broke with an April ruling from the 3rd Circuit Court of Appeals, which allowed Kalshi to keep doing business in New Jersey while its appeal process continues.
Appeal court sides with states
According to the April ruling, Kalshi was likely to succeed with its argument that federal law preempts New Jersey's regulations. The disagreement between the circuits has set up a potential Supreme Court case, the outlet reports.
CoinTelegraph reported on Wednesday that a group of state lawmakers had filed an amicus brief with the Supreme Court. The brief urges the justices to weigh in on the dispute between Kalshi and state gaming authorities.
At stake is whether state authorities or federal agencies hold jurisdiction over prediction market companies. The question has drawn attention as such platforms expand into contracts tied to sports and other events.
Circuit split widens
The case remains live, with the circuit split giving Kalshi grounds to seek review at the highest level. No date has been set for any Supreme Court consideration, according to the reporting.