Appeals Court Rules Ohio and Tennessee Can Regulate Kalshi Under Gambling Laws

A three-judge panel of the 6th U.S. Circuit Court of Appeals has ruled that Ohio and Tennessee may apply state gambling laws to Kalshi's event contracts. Kalshi, a prediction market platform, had argued that its offerings are financial "swaps" subject exclusively to federal Commodity Futures Trading Commission (CFTC) oversight. However, the court rejected this, with Circuit Judge Julia Smith Gibbons noting that swaps are intended for financial risk management, not gaming. The ruling overturns a preliminary injunction in Tennessee and upholds a lower court's decision in Ohio, marking a significant development in the ongoing legal battle over whether prediction markets should be regulated as financial instruments or gambling. This decision creates a split among federal appeals courts, increasing the likelihood that the issue may eventually reach the Supreme Court as similar cases continue to emerge across various states.