A U.S. district judge in Columbus denied Kalshi’s request for a preliminary injunction, ruling that the platform’s sports-event contracts fall within Ohio gambling law. The decision gives state regulators room to enforce those rules against Kalshi and weakens the company’s attempt to rely on federal commodities protections.
The ruling also sharpens a broader legal conflict over who should control prediction markets tied to sporting outcomes. By deepening a split among federal courts in the Sixth Circuit, the case increases the likelihood of an appellate fight that could shape the regulatory future of sports-based prediction contracts.
Ohio court rejects Kalshi’s federal preemption argument
Chief U.S. District Judge Sarah Morrison found that Kalshi had not shown its sports contracts were preempted by the Commodity Exchange Act. The court concluded that sports outcomes do not serve the same economic function as traditional financial instruments, rejecting the idea that such contracts should automatically be treated as federally regulated swaps.
In the opinion, the judge said that classifying every sports wager as a swap under federal law would be “absurd,” and on that basis denied the emergency relief Kalshi had sought. That reasoning leaves Ohio free, at least for now, to treat the contracts as gambling products rather than federally protected market instruments.
Ohio Attorney General Dave Yost welcomed the ruling and called it a “big win for Ohio.” His position was that Kalshi’s sports-event contracts resemble gambling in practice and therefore fall squarely within the state’s regulatory authority.
Legal scholars cited in the record said the decision creates a serious challenge for platforms trying to use federal preemption to offer sports-related prediction markets nationwide. The ruling makes clear that a federal commodities framework cannot be assumed to shield these products from state gambling enforcement.
Appeal could shape national treatment of sports prediction markets
The Ohio decision now sits beside a conflicting federal ruling from Tennessee, where Kalshi recently secured a preliminary injunction. That contrast has created a direct split within the Sixth Circuit and added urgency to the question of whether prediction markets will ultimately be governed by federal commodity law or by state gambling regimes.
Kalshi said it will appeal the Ohio ruling to the U.S. Court of Appeals for the Sixth Circuit. The appeal will test whether federal oversight can override state betting laws for sports-event contracts and could become the most important near-term legal checkpoint for the sector.
The dispute also carries immediate consequences for traders and market makers. If states are allowed to enforce gambling laws against Kalshi’s sports products, platforms may face licensing limits that reduce availability, weaken liquidity, and increase execution and hedging costs across affected jurisdictions.
The legal position of sport-based prediction markets remains unsettled. The next phase of litigation, along with any future regulatory guidance, will determine whether operators must tailor products state by state or can eventually rely on a uniform federal framework.
