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U.S. Sixth Circuit Court rules that Kalshi sports contracts are not swaps and are subject to state regulations
BlockBeats news,September 26, a panel of the U.S. Court of Appeals for the Sixth Circuit ruled on September 25 that Kalshi’s sports-related event contracts are not swaps and therefore are subject to state regulations rather than the rules of the federal Commodity Futures Trading Commission. The ruling concerns two cases Kalshi brought against regulators in Ohio and Tennessee. Kalshi sought injunctions to block both states from bringing lawsuits; a federal court in Ohio dismissed its motion, while a federal court in Tennessee granted it. The panel held that although Kalshi’s sports event contracts are conditioned on the occurrence of an “event,” the contracts do not depend on events with “potential financial, economic, or commercial consequences” and therefore do not meet the statutory definition of a swap. Using the New York Giants winning the Super Bowl as an example, the ruling stated that if the “event” is defined as the Giants’ victory, that victory is the “event having occurred”; if the event is actually the game itself, the Giants’ victory is merely the outcome, and the statutory text does not expressly require outcomes to be excluded from the definition of an event. The court therefore declined to add such a restriction on its own.
This is the latest ruling by a court of appeals in the legal battle between states and prediction-market providers, further increasing the possibility that the Supreme Court will ultimately intervene. Previously, the Third Circuit ruled that CFTC had jurisdiction over prediction markets, while the Eighth Circuit ruled that sports-related contracts are not swaps. The Third Circuit case has been appealed to the Supreme Court. Since the 2024 election, states have sought to bring prediction markets within state regulatory frameworks, arguing that these markets offer the same products as state-licensed platforms without paying state taxes and often allow access to people aged 18 while most state event-prediction operators require users to be aged 21 or older.
Original link https://m.theblockbeats.info/flash/369066