Kalshi is waddling through the familiar quagmire that has judges and regulators second-guessing the nature of its products. Is it a platform offering financial products and trades regulated under the Commodity Futures Trading Commission, or is it a covert form of gambling, as trade group Gambling Is Not Investing insists?
Kalshi Faces Another Legal Setback in Ohio
The New York-based prediction market platform has been called out by a sports betting company in the latest legal drama involving it, this time in Ohio, where US District Judge Sarah Morrison has sided with the Ohio Casino Control Commission.
Judge Morrison went into detail, taking a closer look at the arguments presented by both Kalshi and the gambling regulator. She argued that “swaps” – a federally regulated contract – are a “transaction involving financial instruments and measures that traditionally and directly affect commodity prices.”
She pointed out that weather and energy costs fall under this category, but how many points a team would score against another does not. Judge Morrison further said that if she were to rule that sports event contracts are indeed swaps, this could have serious implications for how such contracts are construed in the future.
Naturally, Ohio Attorney General Dave Yost was amongst the first to cheer over the decision, and said that it was a big win for the state.
“Federal judge today ruled that Kalshi is subject to Ohio sports betting law,” Yost explained, sharing the judge’s ruling. This does not mean that the battle is over, however.
Too Early to Celebrate as Tennessee Sets a Precedent
In fact, Kalshi can pursue further recourse and appeal the decision, as it recently did in Tennessee, where the company managed to overturn a similar ruling. This is precisely what Kalshi will attempt to do in this instance as well.
“We respectfully disagree with the Court’s decision, which splits from a decision from a federal court in Tennessee just a few weeks ago, and will promptly seek an appeal,” the company noted.
This does not exhaust the list of states that are currently pushing back against Kalshi, with Massachusetts, Nevada, and Michigan most recently among the ones looking to turf out Kalshi’s sports event contracts.
Kalshi is waddling through the familiar quagmire that has judges and regulators second-guessing the nature of its products. Is it a platform offering financial products and trades regulated under the Commodity Futures Trading Commission, or is it a covert form of gambling, as trade group Gambling Is Not Investing insists? Kalshi Faces Another Legal Setback