6th Circuit rules against Kalshi, setting up Supreme Court case
In brief
- 6th Circuit unanimously sided with Ohio and Tennessee against Kalshi on Friday
- Kalshi's sports contracts don't qualify as CFTC-regulated swaps under federal law
- 3rd Circuit's April ruling allowing Kalshi in New Jersey created a circuit split
- Conflicting decisions set stage for potential Supreme Court review
- State lawmakers filed amicus brief urging Supreme Court intervention
Circuit split widens
The ruling followed a similar decision from the 9th Circuit Court of Appeals last month, both rejecting Kalshi's argument that federal law should govern its operations. Yet the picture became more complicated in April when the 3rd Circuit Court of Appeals issued a different ruling, allowing Kalshi to do business in New Jersey as its appeal process proceeds. That decision said Kalshi was likely to succeed with its argument that federal law preempts New Jersey's regulations.
The conflicting circuit court rulings have set up a potential Supreme Court case.
Path to the highest court
The split among federal appeals courts has drawn the attention of state lawmakers. A group of state lawmakers filed an amicus brief with the Supreme Court, urging it to weigh in on the case between Kalshi and state gaming authorities. The Supreme Court case could resolve whether state authorities or federal agencies have jurisdiction over prediction market companies, a question that's grown more urgent as the industry expands.
The 6th Circuit ruling came after Kalshi challenged state-level restrictions on sports-event prediction contracts. The company had argued its products fall under federal CFTC authority, but the court disagreed. With the 3rd and 6th circuits now at odds, the legal framework governing prediction markets remains unsettled.
