TLDR
- An Ohio federal judge ruled that Kalshi’s sports prediction markets count as gambling and must follow Ohio state law.
- The judge rejected Kalshi’s argument that its contracts are “swaps” covered by federal commodity law.
- Ohio Attorney General Dave Yost called it a “big win for Ohio” on social media.
- Kalshi says it will appeal the ruling, pointing to a conflicting decision from a Tennessee federal court.
- Courts in Massachusetts and Nevada have also sided with state regulators against Kalshi in recent months.
Kalshi, a New York-based prediction market platform, lost a key legal battle in Ohio this week. A federal judge ruled that its sports-related markets are gambling and must follow state law.
U.S. District Judge Sarah Morrison denied Kalshi’s request for an injunction against the Ohio Casino Control Commission. The commission had been trying to stop Kalshi from operating as an unlicensed sportsbook in the state.
Kalshi had argued that its contracts should be treated as “swaps” — a type of financial instrument regulated at the federal level under the Commodity Exchange Act. The judge did not accept that.
Morrison wrote that swaps are tied to things like currency exchange rates, weather, and energy costs — factors that directly affect commodity prices. The score of a basketball game does not meet that standard, she said.
“The number of points scored in the Huskies-Bobcats game does not,” she wrote, adding that calling a sports contract a swap would lead to “absurd” results.
The judge also found no evidence that Congress ever intended federal law to override state sports gambling rules. Her opinion ran 21 pages.
Ohio Attorney General Dave Yost was quick to respond. “Kalshi argued the federal Commodity Exchange Act preempts enforcement of Ohio law. Nope,” he wrote on X. “These ‘prediction markets’ have exploded and look an awful lot like gambling. Big win for Ohio!”
Kalshi said it disagrees with the ruling and plans to appeal. The company pointed to a different outcome in Tennessee, where a federal judge recently blocked Nashville from applying state gambling rules to the platform.
A Split in the Courts
The Ohio ruling creates a legal split. Federal courts in Tennessee and New Jersey have ruled in Kalshi’s favor. But courts in Ohio, Massachusetts, and Nevada have sided with state regulators.
That split may eventually push the issue toward higher courts.
The Commodity Futures Trading Commission has also weighed in. CFTC Chair Michael Selig said in February he would push back against state efforts to regulate prediction markets, calling them part of the CFTC’s “exclusive jurisdiction.”
Selig said prediction markets help everyday Americans manage financial risk and serve as a check on media and information.
Political Pushback Growing
Not everyone agrees. Utah Governor Spencer Cox said in February that prediction markets “are destroying the lives of families and countless Americans” and “have no place” in his state.
Kalshi operates alongside other platforms like Polymarket, letting users bet on outcomes in politics, sports, and world events.
The company filed its original suit against Ohio regulators in October. The case will now move to the appeals process.
