Kalshi subject to state gambling laws, appeals court finds -- major blow to prediction market giant
A US appeals court ruled that Ohio and Tennessee can regulate Kalshi's event contracts under state gambling laws.Summary
A US appeals court ruled that Ohio and Tennessee can regulate Kalshi's event contracts under their gambling laws, delivering a major blow to the prediction market giant. The 6th US Circuit Court of Appeals found that Kalshi failed to demonstrate its sports-event contracts qualify as "swaps" falling under exclusive federal CFTC jurisdiction, and further held that even if they were swaps, the Commodities Exchange Act does not preempt state gambling laws. This decision could usher in a tougher regulatory era for prediction market operators nationwide and potentially lead to outright bans in large states like California that prohibit sports betting. The ruling is the latest development in a prolonged legal saga in which Kalshi has been battling more than a dozen state lawsuits and a trio of suits from Native American tribes seeking to remove Kalshi from tribal land. Despite mounting legal threats, venture capitalists continue to pour money into Kalshi, which has raised $2.6 billion total and is reportedly in talks for additional financing that could value it at $40 billion. Some investors remain optimistic, noting that the Trump administration's support of prediction markets could mean that by the time a new administration takes office, Kalshi may be so deeply integrated into financial markets and everyday American life that unwinding it would be deeply unpopular.
(Source：New York Post)