Federal Court Rules Ohio, Tennessee Can Regulate Sports Event Contracts Under Gambling Laws

The 6th U.S. Circuit Court of Appeals in Cincinnati ruled that Ohio and Tennessee can regulate event contracts based on the states’ existing gambling laws.

This decision adds to the legal uncertainty in the prediction markets sector, as different federal courts have issued conflicting rulings on the matter. The 9th Circuit in San Francisco ruled that Nevada could apply its gambling laws to sports event contracts. However, the 3rd Circuit in Philadelphia sided with Kalshi, arguing that these markets are the exclusive remit of the federal regulator.

Kalshi, a prediction market platform, argued that it does not expect the decision to survive further legal review. In a comment for Reuters, a media outlet, Kalshi spokesperson Dani Lever had this to say: 'The ruling shows exactly why a state-by-state patchwork doesn't work. Markets can't operate when the rules change at every state line, which is why Congress created a single federal regulator with nationwide rules.'