Kalshi Ban Request Denied, US Judge Rules Prediction Market Not Preempted by State Gambling Law

March 11 — Chief Judge Sarah D. Morrison of the U.S. District Court for the Southern District of Ohio ruled there is no historical evidence Congress intended federal law to preempt state sports betting regulations, rejecting a preliminary injunction request from prediction market platform Kalshi. Earlier, Kalshi sued the Ohio Casino Control Commission to block enforcement action against its event contracts under state gambling law. Last year, the commission accused Kalshi of operating illegal sports betting in Ohio. Kalshi argued its event contracts are regulated under the Commodity Exchange Act as derivative transactions (overseen by the CFTC), meaning federal rules should take precedence over state gambling laws. But the judge cited historical and legislative context: no proof Congress intended that law to preempt state sports betting rules. She noted that when the Dodd-Frank Act amended relevant laws in 2010, the U.S. still broadly restricted sports betting. Kalshi plans to appeal the ruling. The case is a key test of prediction markets’ legal status, with the outcome potentially impacting compliance prospects for other U.S. platforms like Polymarket.