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A federal appeals court has ruled that Tennessee and Ohio can enforce their gambling laws against Kalshi’s event contracts, rejecting the company’s argument that the markets are regulated exclusively at the federal level.
The 6th U.S. Circuit Court of Appeals issued the decision on Sept. 25. The ruling vacated a preliminary injunction that had blocked Tennessee from enforcing its gambling laws against Kalshi and upheld the denial of similar relief in Ohio.
Court rejects Kalshi’s federal preemption argument
According to the ruling, Kalshi did not show that its sports event contracts were swaps subject only to regulation by the Commodity Futures Trading Commission. The court also said the Commodity Exchange Act did not preempt gambling laws in Tennessee or Ohio.
Circuit Judge Julia Smith Gibbons, writing for a unanimous three-judge panel, said gambling regulation “lies at the heart of the state’s police power.” The panel also said the Commodity Exchange Act’s “core purpose” did not appear to cover contracts such as wagers on corner kicks in a soccer match or whether a 30-leg parlay would hit.
The panel consisted of Gibbons, Eric Clay and Rachel Bloomekatz.
Ruling adds to growing split among appeals courts
The decision deepens a split among federal appeals courts over who has authority over prediction markets.
Last month, the 9th Circuit said Kalshi’s event contracts are subject to Nevada’s gambling laws. In April, the 3rd Circuit said Kalshi’s contracts are not subject to New Jersey’s gambling laws. New Jersey has asked the U.S. Supreme Court to overturn that 3rd Circuit decision.
Kalshi said it does not expect the 6th Circuit decision to survive further legal review. Spokesperson Dani Lever said the ruling showed “exactly why a state-by-state patchwork doesn’t work.”
Tennessee Attorney General Jonathan Skrmetti called the ruling a “great win” and said, “Sports wagering is heavily regulated because it can do a lot of harm, and I’m glad we thwarted Kalshi’s efforts to remove every safeguard and put Tennessee sports bettors at risk.”
The source material does not identify any immediate change in West Virginia law or enforcement. But the split among the 3rd, 6th and 9th circuits keeps the broader question of how states may regulate prediction markets unsettled.
More from playwv.com – Federal bill would bar candidates from trading on their own election markets – Federal judge denies Kalshi injunction request in Iowa case over event contracts – CFTC settlement bars former White House worker from prediction markets after Kalshi profits
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Source: As reported by Jonathan Stempel.
