Another appeals court rules against prediction market provider Kalshi, says sports contracts are subject to state regulations
A Sixth Circuit Court of Appeals panel ruled that prediction markets' sports-related events contracts are not swaps, and therefore aren't subject to federal regulatory oversight.
A panel of judges on the Sixth Circuit Court of Appeals ruled Friday that prediction market provider Kalshi's sports-related events contracts are not swaps, and therefore are subject to state gaming regulations rather than the federal Commodity Futures Trading Commission's rules.
It's the latest appeals court to weigh in on the ongoing legal fight between states and prediction market providers, and the ruling creates further reason for the U.S. Supreme Court to ultimately weigh in on the matter.
Friday's ruling addresses two cases brought by Kalshi against regulators in Ohio and Tennessee. The platform wanted to secure injunctions blocking the states from suing it, and while an Ohio federal court denied Kalshi's motion, a Tennessee federal court granted it.
"While we agree with Kalshi that its sports-event contracts are conditioned on the occurrence of 'event[s],' we conclude that Kalshi’s contracts do not depend on events that are 'associated with a potential financial, economic, or commercial consequence' within the meaning of the statute," the ruling said.