US regulator backs Kalshi in Ohio sports betting jurisdiction battle
The U.S. Commodity Futures Trading Commission (CFTC) has filed a brief supporting Kalshi in the company’s legal fight against the state of Ohio. The agency is asking an appeals court to affirm that the regulator has jurisdiction over prediction markets.
The CFTC filed an amicus brief in the Sixth Circuit Court of Appeals on Tuesday, accusing Ohio of “jurisdictional overreach” after state authorities told Kalshi last year to stop offering sports event contracts in the state, calling them unlicensed sports gambling.
Kalshi sued Ohio authorities in October, seeking to have a federal court stop the Ohio Casino Control Commission and the state attorney general from taking action. But the court denied the request in March, leading Kalshi to appeal the decision.
“The federal district court in Ohio took an improperly narrow view of the Commission’s jurisdiction, and we are asking the Court of Appeals to correct that error,” CFTC Chairman Mike Selig said in a statement.
“As I’ve said repeatedly, the CFTC will not allow overzealous state governments to undermine the agency’s longstanding authority over these markets.”
The dispute is one of many similar cases determining whether states have the power to restrict federally regulated prediction markets and has implications for major prediction market platforms such as Kalshi and Polymarket.
The CFTC’s latest amicus brief is its second backing a prediction market after it filed one in the Ninth Circuit Appeals Court in February, supporting Crypto.com in a legal battle against regulators in Nevada.
In its brief, the CFTC argued that “Ohio’s jurisdictional overreach into the Commission’s sphere threatens regulatory upheaval,” as the agency oversees event contracts trading as swaps or binary options on designated contract markets (DCMs).
“If states can restrict event contracts on sports, the Commission’s longstanding jurisdiction over these other event contracts could be imperiled too,” it wrote. “The Court should enforce the Commission’s exclusive jurisdiction and hold that Ohio cannot regulate event contracts traded on DCMs.”
The CFTC’s brief comes after it sued five states to assert its jurisdiction over prediction markets, launching action against regulators in Wisconsin, New York, Arizona, Connecticut, and Illinois.
The states had either sent cease-and-desist letters or had sued the prediction markets Kalshi, Polymarket, Crypto.com, Robinhood, and Coinbase, all of which are CFTC-regulated DCMs, over their offering of sports event contracts.
“States cannot circumvent the clear directive of Congress,” Selig said last month after the CFTC sued Wisconsin. “Our message to Wisconsin is the same as to New York, Arizona, and the others: if you interfere with the operation of federal law in regulating financial markets, we will sue you.”
