The U.S. Sixth Circuit Court of Appeals ruled that Ohio and Tennessee may enforce gambling laws against Kalshi
On September 25, the U.S. Court of Appeals for the Sixth Circuit ruled that Ohio and Tennessee may enforce state gambling laws on the sports contracts of prediction market platform Kalshi. The court upheld the Ohio federal judge's decision to deny blocking state regulators from enforcement, and vacated the protective order previously granted to Kalshi in Tennessee. The court held that Kalshi failed to prove that its sports contracts are swap contracts under the exclusive jurisdiction of the Commodity Futures Trading Commission (CFTC); even if they constitute swaps, federal law would not preclude the application of the two states' gambling laws. The court cited Kalshi's previous litigation statements and platform rulebook to reject its claim of comprehensive federal preemption. The ruling is at the temporary injunction stage and does not require Kalshi to stop offering contracts, but the two states may enforce their laws during the pendency of the case. Kalshi's current record in federal appellate courts is 1 win and 2 losses, with an appeal involving Maryland still pending in the Fourth Circuit. (Bitcoin.com News)
The Sixth Circuit ruling lets Ohio and Tennessee enforce gambling laws against Kalshi's sports contracts, rejecting full CFTC preemption and raising legal uncertainty for prediction market platforms. This increases compliance and regulatory risk for the prediction market sector, likely dampening sentiment around related platforms in the short term; impact on BTC or ETH is limited. Prediction market sector short-term bearish (medium).