Will Kalshi Win Ohio Case? CFTC Says Federal Law Should Apply

TLDR

• The CFTC filed an amicus brief supporting Kalshi in the Sixth Circuit.
• Ohio claims Kalshi operated unlicensed sports betting through event contracts.
• The CFTC says prediction markets cross state lines and need federal oversight.
• The agency has sued five states over prediction market jurisdiction disputes.
• The case could shape whether prediction markets face federal or state rules

The Commodity Futures Trading Commission has backed Kalshi in its legal dispute with Ohio officials, arguing that the state is attempting to regulate prediction markets in an area reserved for federal oversight.

The agency filed an amicus brief on Tuesday in the U.S. Court of Appeals for the Sixth Circuit, challenging Ohio’s 2025 complaint against Kalshi. Ohio officials, including Ohio Casino Control Commission Executive Director Matthew Schuler, have argued that Kalshi’s event contracts amount to unlicensed sports betting.

The case is part of a growing national dispute over whether prediction markets should be regulated mainly as federally supervised derivatives products or as gambling activity subject to state gaming laws.

In March, Chief Judge Sarah D. Morrison of the U.S. District Court for the Southern District of Ohio denied Kalshi’s request for a preliminary injunction. The court rejected the view that Congress clearly intended federal derivatives law to override state sports gambling rules.

CFTC Challenges Ohio Court Ruling

CFTC Chair Michael Selig said the Ohio district court took too narrow a view of the agency’s authority over prediction markets. He said the commission is asking the appeals court to correct that reading.

Selig said the CFTC will not allow state governments to weaken the agency’s authority over federally regulated markets. The commission argues that prediction markets cross state lines and therefore require a national regulatory framework.

The CFTC’s position is that event contracts listed on federally registered platforms fall within its jurisdiction. That view places Kalshi closer to derivatives markets than state-regulated sportsbooks.

Selig repeated the agency’s position during remarks at the Financial Industry Regulatory Authority’s annual conference. He said national markets need a federal regulator because users trade across the country.

The Ohio case now gives the Sixth Circuit an opportunity to examine where federal derivatives law ends and state gambling authority begins.

States Push Back on Prediction Markets

Several states have challenged prediction market operators, especially over contracts tied to sports outcomes. State officials argue that these products resemble gambling and should follow local gaming laws.

New York Attorney General Letitia James and 37 other attorneys general recently filed an amicus brief supporting Massachusetts in a related lawsuit against Kalshi. James said prediction markets cannot ignore state gambling laws designed to protect consumers.

The CFTC has taken a more aggressive position in recent months. The agency has sued five states, including Wisconsin, Illinois, Arizona, Connecticut and New York, as it seeks to protect its role over prediction markets.

The legal fight has grown as prediction markets have become more visible. Platforms gained public attention during the 2024 U.S. presidential election cycle, when users traded contracts linked to political and economic outcomes.

Sports-related contracts have created the most direct conflict with state regulators. States have long controlled sports betting within their borders, while the CFTC argues that federally listed event contracts should not be blocked by separate state rules.

Kalshi Case Could Shape Market Access

The dispute matters for prediction market platforms because state-by-state regulation could restrict national access. If states can treat certain event contracts as gambling, platforms may need separate approvals across multiple jurisdictions.

A ruling in favor of the CFTC could strengthen federal control over prediction markets and give platforms such as Kalshi more room to operate nationwide. A ruling favoring Ohio could support state authority over sports-linked and gambling-adjacent contracts.

The CFTC is also preparing rules for prediction markets, giving the agency another way to define how event contracts should operate under federal law. Those rules could address listing standards, consumer safeguards and the types of contracts allowed on registered exchanges.

Kalshi has argued that its markets are federally regulated event contracts. Ohio officials argue that the platform’s products violate state gambling rules when they involve sports outcomes.

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