CFTC backs Kalshi in Ohio appeal over prediction market oversight

The Commodity Futures Trading Commission has filed an amicus brief in a U.S. appeals court backing prediction market operator Kalshi in its legal fight against Ohio regulators, as the agency seeks to reinforce federal oversight of prediction markets.

The brief, filed in the U.S. Court of Appeals for the Sixth Circuit in the case KalshiEx LLC v. Matthew T. Schuler, et al., argued that the CFTC has exclusive jurisdiction over prediction markets under a federal regulatory framework established by Congress.

The filing marks the latest step in the agency’s broader campaign against what it described as "state encroachment" on federally regulated prediction markets, which have surged in popularity since the 2024 U.S. presidential election cycle.

Ohio officials, including Ohio Casino Control Commission Executive Director Matthew Schuler, have argued that Kalshi’s sports-related event contracts amount to unlicensed sports betting under state law.

In March, Chief Judge Sarah D. Morrison denied Kalshi’s request for a preliminary injunction, saying Congress had not clearly intended to "preempt state sports gambling laws."

CFTC Chairman Michael S. Selig criticized that ruling in a statement accompanying the filing.

“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,” 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."

The dispute highlights growing tensions between federal regulators and state authorities over whether prediction markets should be regulated under federal commodities law or state gambling laws.

The CFTC has filed lawsuits against Arizona, Connecticut, Illinois, New York, and Wisconsin over attempts to regulate prediction markets. The agency also secured a preliminary injunction against Arizona’s regulation of CFTC-regulated prediction markets and has filed similar amicus briefs in the Ninth Circuit and the Supreme Judicial Court of Massachusetts.

Speaking earlier on Tuesday at the Financial Industry Regulatory Authority annual conference, Selig defended the need for federal oversight of prediction markets.

“We have a federal framework for our markets, and that's there for a reason, because these markets cross state lines,” Selig said. “You've got people trading across the country, and you need a federal regulator for that."

Still, states have continued to push back against the CFTC’s position. Last month, New York Attorney General Letitia James and 37 other attorneys general filed an amicus brief supporting Massachusetts’ lawsuit against Kalshi.

Prediction markets “cannot ignore states' gambling laws that are designed to protect consumers,” James said in a statement.