CFTC Has Voice Heard in Kalshi vs. Ohio Sports Event Contract Lawsuit

• The Commodity Futures Trading Commission filed an amicus brief in support of Kalshi in its lawsuit against Ohio
• The commission filed the brief to protect its jurisdiction over prediction markets
• The commission filed the brief in the U.S. Court of Appeals for the Sixth Circuit

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The Commodity Futures Trading Commission continues to have its voice heard in prediction market operators’ fight to offer sports event contracts throughout the U.S.

The Commodify Futures Trading Commission (CFTC) this week filed an amicus brief in the U.S. Court of Appeals in support of Kalshi, asserting the commission’s “exclusive jurisdiction” over prediction markets. Kalshi filed a federal lawsuit in October against both the Ohio Casino Control Commission and Ohio Attorney General Dave Yost for threats to shut down their event contract market in the Buckeye State.

“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 Michael S. Selig said. “As I’ve said repeatedly, the CFTC will not allow overzealous state governments to undermine the agency’s longstanding authority over these markets.”

CFTC Claims Exclusive Jurisdiction

The amicus brief filed in the U.S. Court of Appeals is similar to other briefs the CFTC has filed in support of prediction markets. The CFTC asserts the Commodity Exchange Act (CEA) has provided the commission with “exclusive jurisdiction” to regulate futures, options, and swaps traded on federally regulated exchanges.

Ohio regulators, and other state gaming regulators, believe they should have a say in regulating event contracts, specifically sports event contracts they allege mirror legalized sports betting.

“This appeal concerns Ohio’s invocation of its gambling laws to prohibit sports-related ‘event contracts’ that are traded on CFTC-registered designated contract markets (DCMs). Ohio is not alone: States across the country have tried to seize authority over DCMs as event contracts gain popularity among Americans. Yet as the Third Circuit held, these ‘event contracts are swaps under the [CEA],’ and so it falls to the Commission—and exclusively the Commission—to regulate them. States cannot invade the CFTC’s exclusive jurisdiction by re-characterizing swaps trading on DCMs as illegal gambling,” CFTC counsel wrote in the brief.

Ohio regulators and the Ohio Casino Control Commission have been fairly aggressive in terms of asserting its own control over sports event contracts being traded in the state.

The Ohio Casino Control Commission sent Kalshi a cease-and-desist letter on March 31, 2025, ordering the company to remit its prediction markets from the state, determining the offerings are too close to sports betting.

In April, the Ohio Casino Control Commission issued a notice of intent to Kalshi to impose a civil penalty or monetary fine of $5 million against the prediction market company for offering unlicensed sports betting in the Buckeye State.

“Based upon the foregoing, and pursuant to Ohio law, Kalshi is subject to administrative action for operating or conducting sports gaming without a license, failing to cooperate with the Commission (which includes failing to abide by the Commission’s cease and desist order and failing to provide the Commission with the information it requested), and engaging in conduct that undermines the integrity, or public confidence in, sports gaming in Ohio,” the Ohio Casino Control Commission wrote in its notice of intent to Kalshi.

Appealing Denial of Preliminary Injunction

Kalshi’s lawsuit is now in the court of appeals, as U.S. District Court Judge Sarah D. Morrison in March denied the prediction market company’s motion for a preliminary injunction. In her decision, Morrison backed the state’s interpretation of the Commodity Exchange Act (CEA), claiming it does not govern sports-event contracts.

If the preliminary injunction had been awarded to Kalshi, the company would have legally been able to offer its sports event contracts in the state through the course of its lawsuit.

 Morrison said it is the court’s obligation to “avoid absurdity.” Ohio, she said, argues that absurd results would flow from defining a swap to include sports-event contracts.

The court agreed with the state’s assessment. Morrison said under Kalshi’s interpretation, a sports-event contract is a swap because “it is a contract for payment based on the outcome of a sporting event.”

“But if that is true, then all contracts for payment based on the outcome of a sporting event—all sports bets—would be forced onto DCMs like Kalshi and every sportsbook in the country would be put out of business. In the absence of congressional intent to effect such a sea change, that result is absurd.”

The CFTC asserts that state-by-state requirements for event contracts would “stand as an obstacle to federal regulation.” The court, the CFTC notes, should not tolerate Ohio’s, and other states, attempt to regulate prediction markets.

“Those contracts have accordingly traded subject to Commission oversight for decades. The fact that contracts where the underlying event involves sports have become increasingly popular does not give the States newfound authority to become derivatives regulators.”