Kalshi loses appeal, setting up potential Supreme Court case

A federal appeals court has sided with Ohio and Tennessee in a dispute over the regulatory status of prediction market contracts offered by Kalshi. On Friday, a three-judge panel of the 6th U.S. Circuit Court of Appeals unanimously found that Kalshi did not establish its sports-event contracts qualify as "swaps" subject to Commodity Futures Trading Commission oversight, leaving regulation to the states. The 6th Circuit's ruling aligns with a recent decision by the 9th Circuit, which also rejected Kalshi's federal preemption argument last month. Those outcomes contrast with an April ruling from the 3rd Circuit, which concluded Kalshi was likely to succeed in arguing federal law preempts New Jersey's state regulations and allowed the company to continue operating in that state while appeals continue. The conflicting appellate decisions have heightened the chances that the U.S. Supreme Court will need to intervene to resolve the jurisdictional question. Cointelegraph reported that a group of state lawmakers filed an amicus brief with the Supreme Court urging it to take up the dispute between Kalshi and state gaming authorities to clarify whether federal agencies or state regulators have final authority over prediction-market companies. Kalshi's loss in the 6th Circuit adds to a patchwork of appellate rulings on the issue, leaving the legal status of prediction-market products uncertain until higher courts provide a definitive ruling. The case remains active as appeals proceed and interested parties seek resolution on the scope of federal versus state regulatory power over such contracts.