Ohio judge denies Kalshi sports prediction market injunction

"Kalshi operates a federally approved designated contract market that lets users trade contracts based on real-world outcomes. The company has expanded those offerings to include sports-event markets, allowing traders to speculate on results such as tournament outcomes or championship winners."

"In its lawsuit, Kalshi argued that the Commodity Exchange Act gives the Commodity Futures Trading Commission exclusive jurisdiction over these types of contracts. The company said that federal authority should preempt state gambling laws."

"Judge Morrison sided with the state at this stage of the case. The opinion added that Kalshi had not shown the Commodity Exchange Act governs the sports-event contracts at issue."

A federal judge in Ohio rejected Kalshi's request for a preliminary injunction that would have prevented state regulators from enforcing sports-gambling laws against the prediction-market exchange's sports-event contracts. Kalshi argued that the Commodity Exchange Act grants the Commodity Futures Trading Commission exclusive federal jurisdiction over these contracts, making them financial derivatives rather than sports betting subject to state law. Ohio regulators countered that the sports contracts function as traditional sports wagers falling under state regulatory authority. The judge sided with the state, finding Kalshi failed to meet the legal standard for preliminary injunction relief and that the company had not demonstrated federal law governs these contracts. The ruling allows Ohio to continue enforcement while the lawsuit proceeds and intensifies a national legal debate over whether sports-prediction contracts are federally regulated derivatives or unlawful state-level gambling.

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