The U.S. Court of Appeals for the Sixth Circuit has rejected an attempt by Kalshi to prevent Ohio from enforcing its sports betting laws. This decision permits state regulators to continue their actions against the company while Kalshi's appeal is still in process.
In an order issued on April 24, a panel of three judges determined that Kalshi did not satisfy the legal criteria necessary for a temporary injunction. They acknowledged that the case presents significant legal questions regarding the division of authority between federal and state governments.
The judges stated, “This split of authorities leaves no doubt that Kalshi has raised serious questions on the merits.” However, they concluded that the company’s arguments were insufficient at this time to warrant a halt in enforcement. “At least at this stage, though, we find the preemption arguments largely in equipoise (if not favoring Ohio),” the panel noted.
This ruling allows Ohio regulators to proceed with enforcement actions, which include a proposed $5 million penalty from the Ohio Casino Control Commission for allegedly running an unlicensed sports betting operation.
Simultaneously, the panel has expedited Kalshi’s appeal, providing limited relief as the larger legal battle unfolds.
This case is part of a broader debate regarding whether prediction market platforms fall solely under the jurisdiction of the Commodity Futures Trading Commission or if they can also be governed by state gambling laws.
Conflicting decisions have emerged from courts across the U.S. on whether the Commodity Exchange Act supersedes state regulations. The Sixth Circuit's ruling may lead to a confrontation with the U.S. Court of Appeals for the Third Circuit, which has shown a more favorable stance toward similar preemption arguments in another case.
The differences in opinions among appellate courts could heighten the chances of this dispute reaching the U.S. Supreme Court.
A federal judge had previously indicated that Kalshi is unlikely to prevail in its lawsuit against Ohio.
The panel included Senior Judge Alice M. Batchelder, Judge Eric E. Murphy, and Judge Kevin G. Ritz.