Federal Appeals Court Rejects Kalshi's Sports Contracts as Swaps

Key Facts

A federal appeals court ruled that Kalshi failed to adequately show its sports event contracts qualify as swaps under the Commodity Exchange Act. The Block reported that the ruling upholds the authority of states like Ohio and Tennessee to regulate prediction market contracts as gambling rather than federally protected swaps.

The court found that Kalshi's sports-related contracts did not meet the legal definition of swaps, allowing state-level sports betting prohibitions to apply. This decision establishes a regulatory precedent that may limit the ability of prediction markets to bypass state gambling laws through federal commodity designations.