Arabic version: محكمة استئناف تؤيد رقابة الولايات على عقود الرياضة

According to Cnbc, the 6th U.S. Circuit Court of Appeals ruled Friday that Ohio and Tennessee may apply their gambling laws to Kalshi’s sports-related event contracts. The unanimous three-judge decision marks the second appeals-court loss for prediction-market platforms in disputes over sports offerings.

Kalshi and other platforms contend that event contracts are swaps, a type of financial derivative regulated by the Commodity Futures Trading Commission. The appeals court said Kalshi had not shown that its sports-event contracts meet the statutory definition of a swap and therefore fall under the CFTC’s exclusive jurisdiction.

The panel also said that, even if the contracts were swaps, the Commodity Exchange Act does not expressly or implicitly preempt Ohio’s and Tennessee’s gambling laws. The ruling overturns a Tennessee federal district court decision that had sided with Kalshi and reaffirms an Ohio federal district court decision supporting the states’ position.

Tennessee Attorney General Jonathan Skrmetti said Kalshi had attempted to avoid rules and taxes associated with sports gambling. Kalshi spokesperson Dani Lever said the company disagreed with the ruling and argued that differing state rules create a patchwork that prevents markets from operating under consistent nationwide standards.

The 9th U.S. Circuit Court of Appeals ruled last month that Nevada can regulate sports-related event contracts, finding they were sports bets rather than swaps. But the 3rd U.S. Circuit Court of Appeals ruled against New Jersey in April, saying the CFTC has exclusive authority over all swaps. New Jersey appealed that decision to the Supreme Court earlier this month, and it remains unclear whether the court will take up the issue now or await additional circuit rulings.