In a landmark decision for the American gambling regulatory landscape, Chief Judge Sarah Morrison of the Ohio Federal Court has officially denied a crucial preliminary injunction sought by the prediction platform Kalshi.
The ruling represents a significant victory for the Ohio Casino Control Commission and the state’s Attorney General, who have actively pursued the platform over alleged gambling violations related to its sports-based contracts.
The Jurisdictional Battleground
Kalshi, which offers online contracts based on real-world sports outcomes, argued that it should be subject to exclusive federal oversight under the Commodity Exchange Act, effectively preempting state gambling laws. However, the court completely rejected this jurisdictional defense.
Judge Morrison noted that Congress never explicitly intended federal commodity laws to override local gambling rules, meaning state regulators maintain absolute authority over sports wagering within their borders.
The ruling highlights a growing conflict between federal aspirations and state-level enforcement. Despite CFTC Chair Michael Selig recently claiming absolute federal jurisdiction, the Ohio court remained unmoved.
“Agency silence does not automatically validate these specific contracts,” the judge stated, concluding that sports-based contracts operate outside federal commodity protections.
Market Implications and Circuit Splits
This decision by the Ohio Federal Court complicates national expansion plans for prediction markets, especially following a contradictory federal victory for Kalshi in Tennessee.
Traditional licensed operators, who spend millions on local compliance, have welcomed the ruling as a necessary step to close financial loopholes used by unregulated competitors. Kalshi representatives have already indicated they will seek a formal appeal to overturn the damaging ruling.
