US Appeals Court Rules States Can Regulate Prediction Markets as Gambling
Key Facts
A US appeals court ruled on Friday that states have the authority to regulate Kalshi's event contracts under their respective gambling laws. Reuters reported that the decision clarifies the legal standing of individual states in overseeing prediction market activities, which were previously at the center of a jurisdictional debate.
The ruling addresses whether event-based contracts should be governed solely by federal commodity laws or if state-level gambling regulations also apply. This determination is expected to create a fragmented regulatory landscape, potentially increasing operational costs for platforms like Kalshi and restricting market access in jurisdictions with stricter gambling prohibitions.
Latest Updates · 2
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Update: The 6th U.S. Circuit Court of Appeals specifically identified Ohio and Tennessee as states that can regulate Kalshi's sports-related event contracts under local gambling laws. This specification clarifies the immediate geographic impact of the ruling on the platform's operations within those jurisdictions.
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Update: The 6th US Circuit Court of Appeals clarified in its ruling that Kalshi failed to demonstrate that its sports event contracts qualify as 'swaps' subject to Commodity Futures Trading Commission (CFTC) regulation. This legal reasoning reinforces the classification of such contracts as gambling activities governed by state laws rather than federal commodity oversight.