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The Commodity Futures Trading Commission has backed Kalshi in its appeals court fight with Ohio, arguing that federally regulated prediction markets fall under CFTC authority rather than state gambling regulators.
The agency filed an amicus brief in the U.S. Court of Appeals for the Sixth Circuit, where Kalshi is challenging Ohio’s effort to stop the company from offering sports-related event contracts in the state.
Ohio Says Kalshi Sports Contracts Are Betting
Ohio officials, including Casino Control Commission Executive Director Matthew Schuler, have argued that Kalshi’s sports-related event contracts amount to unlicensed sports betting.
Kalshi disputes that view. The company says its markets are event contracts traded on a CFTC-designated contract market and governed by federal commodities law.
A Southern District of Ohio judge denied Kalshi’s request for a preliminary injunction in March. The Sixth Circuit later denied emergency relief while allowing the appeal to move forward on an expedited schedule.
CFTC Says Federal Law Preempts Ohio Rules
The CFTC told the appeals court that Congress created a federal framework for regulated derivatives markets under the Commodity Exchange Act.
The agency argued that state gambling regulators cannot block federally regulated event contracts traded on a CFTC-designated exchange.
The brief gives Kalshi support from the federal regulator that oversees designated contract markets. It also adds weight to the company’s argument that state gambling laws should not override federal commodities rules.
Selig Says Prediction Markets Are Financial Instruments
CFTC Chair Michael Selig has also argued that prediction markets and sports betting should be treated separately.
Selig said prediction markets and sports betting are separate and argued prediction markets should be regulated as financial instruments, while adding that the CFTC will continue opposing state attempts to regulate them under gambling laws when offered on federally regulated exchanges.
New Jersey Win and Nevada Loss Show Court Split
Kalshi’s Ohio fight comes as courts remain split on the state-versus-federal question. In April, the Third Circuit affirmed a preliminary injunction in New Jersey, finding that Kalshi was likely to prevail on its argument that the Commodity Exchange Act preempts state enforcement against its sports-related event contracts.
Kalshi has not won everywhere. A Nevada federal judge ruled in November that the company was subject to Nevada gaming rules, rejecting its exclusive federal jurisdiction argument in that case.
Sixth Circuit Ruling Could Shape Ohio Enforcement
The Ohio appeal could help define how far states can go in applying gambling laws to federally regulated prediction markets.
A Kalshi win could strengthen the argument that CFTC-regulated event contracts can operate without state-by-state gambling approval. A loss could give states more room to challenge sports-linked prediction markets under local gaming rules.
For now, the legal line remains unsettled. But the CFTC’s brief makes the federal position clear: prediction markets traded on regulated derivatives exchanges should fall under federal commodities oversight, not state gambling control.
