World Economy

Federal Appeals Court Backs State Authority Over Sports Prediction Markets

The 6th Circuit Court of Appeals ruled Friday that states can enforce gambling regulations on sports-related event contracts offered by prediction market platforms, handing a significant legal victory to Ohio and Tennessee in their dispute with Kalshi.

In a unanimous decision, the three-judge panel rejected Kalshi's argument that its sports contracts qualify as federally-regulated financial swaps under the Commodity Futures Trading Commission's exclusive jurisdiction.

The court determined that even if the contracts met the statutory definition of swaps, federal law does not preempt state gambling statutes.

This marks the second major appellate decision allowing states regulatory control over prediction market sports offerings. The ruling intensifies an ongoing nationwide legal battle between states claiming platforms operate illegal gambling operations and exchanges arguing their products fall under federal financial regulation.