Appeals Court Defeat for Kalshi Could Lead to Supreme Court Battle
A federal appeals court in the 6th Circuit delivered a blow to prediction market platform Kalshi, upholding the authority of Ohio and Tennessee to regulate contracts involving sports events through state-level legislation.
The prediction market platform Kalshi suffered a defeat in its appeal after a federal court determined that the states of Ohio and Tennessee maintain the authority to regulate contracts related to sports events through their respective state gambling legislation.
On Friday, the 6th US Circuit Court of Appeals delivered an unfavorable decision to Kalshi as a panel of three judges unanimously supported the position of Ohio and Tennessee, determining that the prediction market platform had not successfully proven that its contracts involving sports events qualify as "swaps" falling under the regulatory authority of the Commodity Futures Trading Commission (CFTC).
This decision came after a comparable judgment from the 9th Circuit Court of Appeals issued last month, which diverged from a decision made in April by the 3rd Circuit Court of Appeals that permitted the company to continue operations in New Jersey while its appeal process moves forward.
The decision issued in April indicated that Kalshi had a strong likelihood of prevailing with its position that federal legislation supersedes New Jersey's regulatory framework, all of which has created the groundwork for a possible Supreme Court battle.
A report from Cointelegraph published on Wednesday indicated that a coalition of state legislators had submitted an amicus brief to the Supreme Court, calling on the high court to intervene in the dispute between Kalshi and state gaming regulators, with the potential outcome of determining whether state regulators or federal agencies hold authority over companies operating prediction markets.