CFTC Backs Kalshi in Federal Appeal Against Ohio Gambling Regulators

Federal Regulator Intervenes in Prediction Market Dispute

The Commodity Futures Trading Commission (CFTC) has formally supported Kalshi in its legal battle against Ohio state regulators, filing an amicus brief with the U.S. Court of Appeals for the Sixth Circuit on May 12. The federal agency is urging the appeals court to uphold federal authority over prediction markets, marking an escalation in the ongoing jurisdictional conflict between state gambling authorities and federally regulated derivatives platforms.

According to the CFTC, Ohio regulators overstepped their authority by classifying Kalshi's federally regulated event contracts as unlicensed sports gambling. The state had ordered the platform to cease offering sports-related markets to Ohio residents, prompting Kalshi to seek legal protection. A federal district court denied the company's initial request in March, leading to the current appeal.

CFTC Chair Defends Federal Jurisdiction

CFTC Chairman Michael S. Selig, who was confirmed by the Senate and sworn in as the agency's 16th chair on December 22, 2025, following his nomination by President Donald Trump, issued a strong statement defending the commission's regulatory reach. Selig accused the Ohio court of adopting an "improperly narrow view" of the CFTC's statutory authority and emphasized that the agency would not permit "overzealous state governments" to erode federal oversight of prediction markets.

The chairman's remarks underscore the agency's position that event contracts traded on CFTC-regulated exchanges fall squarely under federal derivatives law rather than state-level gambling statutes.

Multi-State Legal Battle Intensifies

The Ohio case represents just one front in a broader nationwide conflict over prediction market regulation. The CFTC disclosed that it has already initiated legal proceedings against regulators in Arizona, Connecticut, Illinois, New York, and Wisconsin. The agency has secured at least one favorable ruling in Arizona, where a court provided protection against state-level regulation of CFTC-supervised prediction markets.

The regulatory dispute has expanded beyond Kalshi to encompass several major platforms operating in the prediction and derivatives space. State enforcement actions have targeted Polymarket, Crypto.com, Robinhood, and Coinbase, according to recent reports. State authorities contend that these products closely resemble sports betting, particularly when contracts reference sporting event outcomes. Platform operators and the CFTC counter that these instruments are federally regulated derivatives products, not gambling.

Sports Contracts Drive Platform Volume

The stakes in this legal confrontation extend beyond jurisdictional principles. Sports-related contracts now represent the majority of Kalshi's trading volume, making the outcome of these cases critical to the company's business model. Chairman Selig has suggested that the disputes could eventually reach the U.S. Supreme Court, reflecting the fundamental constitutional questions at play regarding federal preemption of state gambling law.

Prior Rulings Offer Mixed Signals

While the Ohio case continues, Kalshi has achieved success in other jurisdictions. The company secured a significant victory against New Jersey regulators, where a court affirmed federal oversight of its CFTC-supervised sports contracts. That ruling provided momentum for prediction market operators, though the ongoing appeals in Ohio and other states demonstrate that legal challenges remain active across multiple federal circuits.

The conflict was characterized at a recent Consensus Miami debate as a fundamental clash between regulated financial contracts and traditional state gambling law—a tension that continues to shape the regulatory landscape for blockchain-based prediction markets and crypto platforms offering similar products.