Ohio blocks Kalshi’s sports contracts, calling them gambling
An Ohio federal judge has ruled that Kalshi’s sports prediction contracts amount to gambling, placing them under state oversight.
On Monday, U.S. District Judge Sarah Morrison denied Kalshi’s request for an injunction against the Ohio Casino Control Commission, which argued the New York-based company was operating as an “unlicensed sportsbook.”
Kalshi’s argument: Sports as swaps
Kalshi upholds its stance that its sports-event contracts should be treated as federally regulated swaps overseen by the Commodity Futures Trading Commission (CFTC). The company likened its products to swaps tied to measurable outcomes such as weather or energy prices, insisting state gambling laws should not apply.
Judge Morrison rejected the claim, noting that swaps traditionally involve instruments affecting commodity prices. “The number of points scored in the Huskies-Bobcats game does not,” she wrote, warning against “absurd results” from redefining swaps to include sports contracts.
Ohio Attorney General Dave Yost praised the ruling, saying prediction markets like Kalshi “look like gambling.”
Kalshi’s framing echoes earlier efforts by other similar platforms like Intrade and PredictIt that present prediction markets as financial tools. Regulators, however, have consistently leaned toward classifying them as gambling. Without clear federal preemption, Kalshi faces the same fragmented, state-by-state battles that hindered Intrade and constrained PredictIt.
Appeal and ongoing litigation
Despite the setback, Kalshi vowed to appeal. A spokesperson pointed to the company’s recent victory in Tennessee, where a court blocked Nashville from imposing state regulations. “We respectfully disagree with the Court’s decision,” the spokesperson said.
Since last year, Kalshi has been embroiled in litigation across federal courts, facing challenges from state regulators, tribal governments, and private plaintiffs. The company argues that prediction markets provide valuable forecasting data for investors, businesses, and policymakers—tools for information discovery and risk management rather than entertainment.
The core issue: Federal preemption
In question is CFTC’s authority—whether swaps preempt state gambling laws. The outcome could set a precedent for other prediction market platforms, reshaping compliance nationwide.
Kalshi contends that labelling prediction markets as gambling undermines financial innovation. Yet inconsistent rulings across states have made operations difficult in the country. In addition, regulators often identify prediction markets with gambling.
Kalshi’s competitors include crypto-native platforms like Polymarket, which offer liquidity and innovation but lack consumer protections and face bans in major jurisdictions. Additionally, legacy platforms like PredictIt and regulated betting exchanges like Smartkets also occupy the space. Still, Kalshi’s unique feature is its federal regulatory framework, but inconsistent state rulings threaten scalability.
Global context
Outside the U.S., prediction markets are becoming popular in places like Europe and Asia, as they are often framed as fintech innovation.
Most European regulators, however, classify them as gambling, citing consumer protection concerns. Malta stands out as an exception, offering flexible financial and gaming laws that attract operators seeking legitimacy. Still, legal frameworks vary widely—some countries treat prediction markets as gambling, while others categorise them as derivatives.
In Asia, prediction markets are growing quickly but face uneven regulation. Yet despite the restrictions, Asian users are among the fast-growing demographics, drawn to prediction markets for insights into politics, economics, and sports.
As AI-driven forecasting and fintech adoption accelerate, regulators worldwide will need to decide whether prediction markets belong in finance or gaming.
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