- A federal court in Ohio denied Kalshi‘s request to block state authorities from regulating its sports-event contracts, rejecting the company’s preemption argument.
- The judge ruled that Kalshi failed to prove its contracts were under the exclusive jurisdiction of the CFTC or that federal law preempts Ohio’s sports gambling statutes.
- The decision contradicts recent statements by CFTC Chair Rostin Behnam, who claimed exclusive federal jurisdiction over prediction markets.
- Kalshi plans to appeal the ruling, citing a conflicting decision from a Tennessee federal court just weeks prior.
- The CFTC is reportedly working on guidance for prediction markets, which could be released soon.
On Monday, Chief Judge Sarah Morrison of the U.S. District Court for the Southern District of Ohio denied a critical motion filed by prediction markets platform Kalshi. The company had sought a preliminary injunction to prevent Ohio state authorities from regulating contracts on its platform, specifically those related to sports betting. According to the filed order, the judge found Kalshi’s arguments insufficient.
The court determined Kalshi had not shown its sports-event contracts were subject to the exclusive jurisdiction of the Commodity Futures Trading Commission (CFTC). Consequently, the platform’s claim that federal commodities laws preempted Ohio’s sports gambling laws was rejected. “Kalshi fails to establish that Congress intended the CEA to preempt state laws on sports gambling,” stated the opinion.
This ruling directly challenges the position of CFTC Chair Rostin Behnam, who asserted in February that the federal regulator held exclusive jurisdiction over prediction markets. Meanwhile, Kalshi faces similar legal challenges in other U.S. states over allegations of unlicensed sports betting. The company stated it “respectfully disagree[d] with the Court’s decision” and will promptly seek an appeal.
Last week, Behnam indicated the CFTC was working to provide guidance on prediction markets “in the very near future.” This potential guidance could clarify the regulatory landscape for platforms like Kalshi. However, the agency’s current inaction, noted by the Ohio court, does not prove such contracts are permissible under federal law.
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