CFTC backs Kalshi as Ohio dispute tests prediction-market rules

The U.S. Commodity Futures Trading Commission is stepping up its defense of federal authority over prediction markets, as it filed an amicus brief in the Sixth Circuit backing Kalshi in its challenge to Ohio’s regulatory stance. The CFTC argues that Ohio’s actions amount to jurisdictional overreach and threaten to undermine the agency’s exclusive reach over event contracts traded on designated contract markets (DCMs).

Kalshi, a regulated prediction market operator, sought relief in federal court after Ohio authorities told Kalshi last year to halt offering sports event contracts in the state, labeling them unlicensed sports gambling. Kalshi had proceeded with such contracts in other jurisdictions, but Ohio’s position prompted the company to sue the state attorney general and the Ohio Casino Control Commission in October. A federal district court later denied Kalshi’s request to enjoin the state’s actions in March, prompting Kalshi to appeal. The CFTC’s latest amicus brief represents its second public backing of a prediction-market operator in a circuit court battle, following a similar filing in the Ninth Circuit in February supporting Crypto.com in a Nevada regulatory dispute.

“The federal district court in Ohio took an improperly narrow view of the Commission’s jurisdiction, and we are asking the Court of Appeals to correct that error,” CFTC Chairman Mike Selig said in a statement. “As I’ve said repeatedly, the CFTC will not allow overzealous state governments to undermine the agency’s longstanding authority over these markets.”

The dispute sits at the intersection of federal authority and state law, with implications for Kalshi, Polymarket, Crypto.com and other platforms that offer event contracts. The CFTC’s position is that Ohio’s push to regulate and stop Kalshi’s sports-event contracts threatens what the agency regards as exclusive federal oversight of these markets. The agency asserts that event contracts traded on DCMs fall under its swaps or binary options framework, and that allowing state restrictions undermines the federal framework established to regulate capital markets and related products.

The Sixth Circuit fight is one thread in a broader regulatory battle over prediction markets. The CFTC has brought suits against several states in recent months to enforce federal jurisdiction—moves that echo its stance in states such as Wisconsin, New York, Arizona, Connecticut and Illinois. In those actions, regulators argued that the states attempted to apply local gambling or securities laws to platforms offering sports or other event-based contracts. The CFTC has said that such interference risks fragmenting a federally regulated system and creating a patchwork of inconsistent rules that could chill legitimate market activity.

“If States can restrict event contracts on sports, the Commission’s longstanding jurisdiction over these other event contracts could be imperiled too,” the CFTC wrote in the Sixth Circuit filing. “The Court should enforce the Commission’s exclusive jurisdiction and hold that Ohio cannot regulate event contracts traded on DCMs.”

The broader context includes prior CFTC actions and public statements underscoring a push to define and defend the reach of federal regulation over these innovative markets. The agency has described prediction markets as a domain governed by federal rules, not a patchwork of state prohibitions, and has signaled a willingness to go to court to protect that framework. Chairman Selig’s comments reflect a stance that federal law should guide how event contracts are offered, traded and regulated, even as states press their own regulatory theories.

Beyond the Ohio case, the litigation arc this year places Kalshi and other operators under heightened regulatory scrutiny in multiple jurisdictions. In February, the CFTC filed a separate amicus brief in the Ninth Circuit supporting Crypto.com in its Nevada-related dispute, illustrating a pattern of federal regulators backing prediction-market actors across different appellate courts. The agency’s broader strategy is to hinge its defense on the idea that Congress delegated to the CFTC a specific, exclusive remit over event contracts when traded on regulated venues, a remit that would be compromised if states can arbitrarily circumscribe or ban such activity within their borders.

For market participants, the questions at stake go beyond a single lawsuit. Kalshi, Polymarket, Crypto.com, Robinhood and Coinbase—operators offering sports-event contracts or related products on CFTC-regulated platforms—navigate a regulatory landscape that is still taking shape. A ruling in the Sixth Circuit could either reinforce the federal model, or open the door to a wave of state-by-state attempts to curb or reclassify prediction-market activity. The stakes aren’t purely legal; they determine how traders hedge or speculate on future events, how developers structure product offerings, and how investors assess the regulatory risk embedded in these markets.

Analysts and industry observers have noted that the current wave of cases could influence future Supreme Court considerations, given the nationwide reach and the potential for divergent state outcomes. The ongoing legal drama underscores a central tension: whether prediction markets should operate under a unified federal regime or whether states retain meaningful discretion to restrict or redefine them under local gambling or consumer-protection laws. The resolution of the Ohio matter, and related suits in other circuits, will help clarify the balance between state sovereignty and federal market regulation.

As Kalshi and its opponents await the Sixth Circuit’s ruling, market participants will be watching for several telltale signs: how the court interprets the CFTC’s authority over event contracts, whether state actions can be sustained without chilling cross-border platform operations, and how a potential ruling could alter the business models of prediction-market platforms that rely on regulated DCM environments. The outcome will likely influence how other states approach prediction-market products and could shape the pace at which new event-based financial instruments reach broader adoption.

What comes next may hinge on the Sixth Circuit’s process and timing. While the outcome remains uncertain, the CFTC’s dual-front approach—defending federal jurisdiction in multiple appellate venues—signals that the regulator intends to maintain a central role over how event contracts are offered and traded. For investors and operators alike, the evolving jurisdictional calculus will determine not just legal exposure, but the operating feasibility and strategic planning for prediction-market ecosystems in the years ahead.

Readers should monitor upcoming developments in the Kalshi case for the Sixth Circuit, as well as related actions in Wisconsin, New York, Arizona, Connecticut, and Illinois. The convergence of these cases will help define the boundaries of federal authority in prediction markets and set the tone for how these platforms evolve within a regulated, nationwide framework.