Appeals Court Rules States Can Regulate Kalshi Prediction Contracts
A federal appeals court has determined that state gambling laws apply to Kalshi's event contracts, a significant ruling for the prediction market operator.
A U.S. appeals court ruled Friday that states can regulate Kalshi's event contracts under their gambling laws. The decision by the 6th U.S. Circuit Court of Appeals represents a major legal setback for the prediction market platform.
Kalshi had argued that its sports event contracts qualified as "swaps" and therefore should be exclusively regulated by the federal Commodity Futures Trading Commission. However, the court found that Kalshi did not sufficiently demonstrate this classification. Furthermore, the court determined that federal law does not preempt the gambling regulations of states like Ohio and Tennessee.
The ruling means that states can assert their authority over Kalshi's operations, potentially leading to varied regulatory landscapes across the country for prediction markets.