TLDR
- An Ohio federal court denied Kalshi’s request to block state regulators from overseeing its sports-based prediction contracts
- The judge ruled that federal commodity laws do not override state gambling regulations
- The decision directly contradicts CFTC Chair Michael Selig’s claims of exclusive federal authority over prediction markets
- Kalshi plans to appeal, pointing to a contradictory federal court ruling it won in Tennessee
- The emerging split between federal courts creates growing uncertainty for the prediction market industry
Prediction markets just ran into a wall in Ohio.
Chief Judge Sarah Morrison of an Ohio federal court denied Kalshi a preliminary injunction this week. The platform wanted to stop the Ohio Casino Control Commission and the state attorney general from regulating its contracts.
Kalshi offers online contracts tied to the outcomes of real-world sports events. The company argued that the federal Commodity Futures Trading Commission has exclusive authority over its products.
The judge disagreed.
Morrison found no evidence that Congress intended federal commodity laws to override state gambling regulations. She ruled that the Commodity Exchange Act does not preempt Ohio’s authority to regulate sports wagering.
State regulators in Ohio classify Kalshi’s contracts as unlicensed sports betting. The state attorney general has been actively pursuing the company over gambling violations.
This decision is a direct hit to Kalshi’s core legal strategy. The platform has long maintained that its products are regulated financial instruments, not gambling.
Federal and State Regulators Clash Over Jurisdiction
The ruling puts the Ohio court at odds with recent statements from CFTC leadership. Chair Michael Selig publicly claimed exclusive federal jurisdiction over prediction markets in February. He even threatened lawsuits against state gambling authorities who interfered with federally regulated contracts.
But the Ohio judge noted that the federal government has not actually taken action to regulate these specific contracts. She wrote that agency silence does not automatically validate Kalshi’s products.
Morrison concluded that Kalshi’s sports-based contracts fall outside federal commodity protections entirely. That finding undercuts the CFTC chair’s position.
Selig is currently the only Senate-confirmed commissioner on the CFTC panel. He has promised to release official guidance on prediction markets soon.
Kalshi has already signaled it will appeal the Ohio ruling. The company pointed to a recent federal court victory in Tennessee where the outcome went in its favor.
A Growing Split Between Courts Creates Uncertainty
That contradiction between the Ohio and Tennessee decisions is creating what lawyers call a circuit split. When federal courts in different regions reach opposite conclusions, it often leads to further legal battles or eventual Supreme Court review.
Prediction market platforms face similar lawsuits in other states as well. State regulators across the country have shown little willingness to give up oversight of sports-related wagering.
Licensed sportsbooks have watched these cases closely. Traditional operators spend millions to obtain proper state licenses in each jurisdiction where they operate. Many view prediction markets as competitors using financial loopholes to avoid the same licensing requirements.
State attorneys general have made clear they intend to fight any federal attempt to take away their regulatory authority.
Kalshi’s appeal will be the next major development to watch. The timeline for that process has not been announced.
CFTC Chair Selig’s promised guidance on prediction markets has also not yet been released as of this week.
