Appeals Court Allows Ohio and Tennessee to Enforce Gambling Laws Against Kalshi

A federal appeals court ruled on Sept. 25 that Ohio and Tennessee may enforce their gambling laws against Kalshi, adding to the legal challenges facing the prediction-market operator. The court relied in part on statements Kalshi made during earlier court proceedings.

Ruling Adds to Kalshi’s Legal Challenges

Kalshi offers event contracts that allow users to trade on the outcomes of events, including sporting contests. Regulators and state officials have increasingly questioned whether some of those contracts constitute gambling under state law.

The appeals court’s decision permits Ohio and Tennessee to proceed under their respective gambling statutes. The ruling represents a setback for Kalshi as it seeks to defend its sports-related markets across multiple jurisdictions.

According to the report, the court’s reasoning included arguments and representations previously made by Kalshi in litigation. Such statements can be used by courts when evaluating the company’s legal position and the nature of its contracts.

Litigation Has Created a Circuit Split

Kalshi’s disputes with state authorities have expanded into multiple courts. The company’s multistate litigation has already produced a circuit split, meaning federal appellate courts have reached differing conclusions on related legal questions.

A circuit split can increase the likelihood that the U.S. Supreme Court will be asked to review the issue, although the court is not required to accept such a case.

New Jersey Case Remains Pending

Kalshi is also involved in litigation in New Jersey. The company’s response to a petition before the New Jersey Supreme Court is due next, according to the report.

The outcome of the New Jersey proceedings, along with the decisions from other courts, could help determine how prediction markets and sports-related event contracts are regulated across the United States.