The U.S. Court of Appeals ruled that the gambling laws can be applied to Kalshi's Ohio-Tennessee event contract.

U.S. Court of Appeals for the Sixth Circuit with Kalshi's sports event contract: When a prediction market may fall under state betting laws

What's this about?

The U.S. Court of Appeals for the Sixth Circuit ruled in a ruling on March 25 that Kalshi's sporting event contracts could be subject to Ohio and Tennessee gambling laws, rejecting his request to proceed with such contracts in both states.

The court also found that Kalshi's sports event contracts were not 'swappable' under the Commodity Futures Trading Commission (CFTC) rules, and therefore did not fall within the exclusive jurisdiction of the CFTC. This finding allowed Ohio and Tennessee to use state gambling laws as a framework governing services which courts could view as entering into a betting marketplace even though KALSHI was an event contract platform or prediction market.

Why is diagnosis important?

The case reflected a jurisdictional dispute between the US federal and state CFTC as regulators of derivatives markets and forward contracts, but since the court did not recognise that sports event contracts were 'swaps' under applicable law, Kalshi could not invoke the CFTC's exclusive jurisdiction to exclude enforcement of state gambling laws in this class.

On appeal, the U.S. Court of Appeals for the Sixth Circuit upheld an Ohio federal district court ruling that denied a request for interim protective measures and vacated Tennessee's interim protection order. The suspension was effective in practice because state law enforcement in Tennessee is no longer constrained by the lower courts' interim orders.

The impact on readers interested in the prediction markets of Thailand and Myanmar.

The ruling does not dictate the direction of cryptocurrency prices or say which platforms are safer to use, but it helps separate fact from service designation. Predictive markets may be classified as gambling in some states even if they're open for trading via digital technology or connected to a digital asset system.

For Thai readers who are familiar with digital asset trading above Bitkub or providers regulated by the SEC (Thailand) , which often express value in baht ( THB ), this ruling serves as a reminder that the name 'event contract' or 'profit prediction market' does not always determine legal status. If the activity is engaged in gambling under local law, pricing at THB does not make the service into a similarly regulated digital asset.

For readers in Myanmar who may access cross-border platforms via the Internet or use digital assets as mediums, this ruling points out that regulation can depend on the laws of a country or region where users are located, not just where they're registered.

The limitation of this story is that the U.S. Court of Appeals for the Sixth Circuit's ruling directly affects relevant cases and states, does not imply that other courts or regulatory agencies will interpret it in exactly the same way in every case, and is not a recommendation to buy, sell, or use any particular platform.