Kalshi Loses 6th Circuit Appeal Over Sports Contracts — SkimNews
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- 6th US Circuit Court of Appeals ruled unanimously against Kalshi on Friday, siding with Ohio and Tennessee that the prediction market's sports-event contracts can be regulated under state gambling laws.
- Kalshi failed to demonstrate its sports-event contracts are "swaps" under the jurisdiction of the Commodity Futures Trading Commission (CFTC), according to the three-judge panel.
- 9th Circuit Court of Appeals issued a similar ruling against Kalshi last month, creating a circuit split with the 3rd Circuit Court of Appeals, whose April decision allowed Kalshi to keep operating in New Jersey.
- 3rd Circuit broke from the other circuits in April, finding Kalshi likely to succeed in arguing that federal law preempts New Jersey's regulations while its appeal proceeds.
- State lawmakers filed an amicus brief with the Supreme Court urging it to weigh in, potentially resolving whether state gaming authorities or federal agencies have jurisdiction over prediction market companies.
Why it matters: Kalshi now faces unfavorable rulings from two federal circuits while only the 3rd Circuit has sided its way — a split state lawmakers are already asking the Supreme Court to resolve. The eventual ruling will determine whether prediction-market sports contracts are regulated by the CFTC as swaps or by state gambling authorities, a question that could reshape the fast-growing prediction market industry.
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