A Sixth Circuit Panel Says Kalshi's Sports Contracts Aren't Swaps
Another federal appeals court has ruled that states can enforce their gambling laws against the prediction market Kalshi, which argues that it can only be regulated by the US government. A unanimous three-judge panel of the Sixth Circuit ruled against Kalshi and in favor of Ohio and Tennessee. The court found that sports wagers offered on Kalshi do not meet the statutory definition of a swap — the category of contracts over which the Commodity Futures Trading Commission has exclusive jurisdiction. The case turns on that definition rather than on a broad pronouncement about prediction markets generally.
AI-generated discussion · Different perspectives
The panel also rejected Kalshi's fallback argument: even if the wagers were swaps, the court found that the regulatory scheme Congress created would not stop states from enforcing their gambling laws against prediction markets.
Which puts a lot of weight on a definition. The holding is that these sports-event contracts haven't been shown to satisfy the statutory meaning of a swap — not that prediction markets are gambling in principle.