The US Commodity Futures Trading Commission (CFTC) has formally backed prediction market platform Kalshi in its ongoing legal dispute with the state of Ohio, arguing that federal regulators — not individual states — have authority over prediction markets.
In an amicus brief filed Tuesday with the Sixth Circuit Court of Appeals, the CFTC accused Ohio regulators of exceeding their authority after the state attempted to block Kalshi from offering sports-related event contracts, classifying the products as unauthorized sports betting.
The conflict began after Ohio officials ordered Kalshi to halt operations involving sports event contracts within the state. Kalshi responded by filing a lawsuit in October seeking federal protection against enforcement actions by the Ohio Casino Control Commission and the state attorney general. However, a federal court rejected the company’s request for relief in March, prompting Kalshi to appeal the decision.
CFTC Chairman Mike Selig criticized the earlier ruling, saying the district court adopted an overly limited interpretation of the agency’s regulatory powers.
“The federal district court in Ohio took an improperly narrow view of the Commission’s jurisdiction,” Selig said, adding that the agency would continue defending its long-established oversight of federally regulated prediction markets against what he described as aggressive state intervention.
Federal vs. State Control Over Prediction Markets
The case is part of a growing legal battle over whether states can restrict federally regulated prediction market platforms. The outcome could significantly impact companies such as Kalshi and Polymarket, which offer event-based financial contracts tied to elections, sports, and other real-world outcomes.
In its filing, the CFTC argued that allowing states to regulate sports-related event contracts could threaten the agency’s broader authority over event-based financial products, including swaps and binary options traded on federally approved designated contract markets (DCMs).
The regulator warned that Ohio’s actions risk creating regulatory instability by interfering with markets already governed under federal commodities law.
The brief stated that if states are permitted to prohibit sports event contracts, it could undermine the CFTC’s longstanding jurisdiction over similar federally regulated event markets across the country.
Growing Legal Pressure Across Multiple States
The Ohio case is not the only legal dispute involving prediction markets and state regulators. Earlier this year, the CFTC also filed an amicus brief supporting Crypto.com in a separate legal battle against Nevada regulators.
More recently, the agency launched lawsuits against regulators in Wisconsin, New York, Arizona, Connecticut, and Illinois in an effort to reinforce federal control over prediction market oversight.
Those states had either issued cease-and-desist orders or initiated legal actions against companies including Kalshi, Polymarket, Crypto.com, Robinhood, and Coinbase over their sports event contract offerings.
According to the CFTC, these platforms operate as federally regulated designated contract markets and therefore fall under federal jurisdiction rather than state gambling laws.
Selig previously warned that states cannot override federal commodities regulations, saying the agency would continue taking legal action against jurisdictions attempting to interfere with federally supervised financial markets.
The growing series of court battles is increasingly shaping into a major legal test for the future of prediction markets in the United States, particularly as the sector expands rapidly and attracts greater mainstream attention.
