A Sixth Circuit panel ruled that Kalshi's sports-related contracts are not swaps, subjecting the prediction market provider to state-level regulations rather than federal oversight.
The Sixth Circuit ruled against Kalshi, determining sports contracts are subject to state regulations, a negative outcome for the prediction market provider.
The Sixth Circuit Court of Appeals delivered a setback to prediction market provider Kalshi, ruling that its sports-related event contracts fall under state regulatory jurisdiction. This decision complicates the firm's federal oversight strategy and creates significant legal uncertainty for its product offerings.
The court examined whether sports-related event contracts offered by Kalshi should be classified as swaps under federal law, ultimately deciding they are not.
The decision forces Kalshi to navigate state-level regulations for its sports contracts instead of operating under a unified federal framework.