Kalshi loses again as judges rule prediction markets must obey gambling laws

A federal appeals court has ruled that prediction market Kalshi must comply with state gambling regulations, dealing a significant blow to the platform's efforts to operate under federal oversight alone. A three-judge panel in the US Court of Appeals for the Sixth Circuit unanimously decided that sports wagers offered on Kalshi do not qualify as "swaps" under the Commodity Exchange Act. Consequently, the court held that the Commodity Futures Trading Commission does not have exclusive jurisdiction over these contracts. Furthermore, the ruling clarified that even if these wagers were classified as swaps, federal law does not preempt states like Ohio and Tennessee from enforcing their own gambling statutes. This decision reinforces the ability of individual states to regulate prediction markets within their borders, challenging Kalshi's argument that its operations are shielded from state-level gambling enforcement by federal financial regulations.