Ohio Judge Denies Kalshi Injunction in State vs Federal Clash

Chief Judge Sarah D. Morrison of the U.S. District Court for the Southern District of Ohio denied Kalshi’s motion for a preliminary injunction on 9 March, allowing the Ohio Casino Control Commission to continue enforcing state sports-betting laws against the prediction market platform.

The ruling is the latest in a string of state-level legal victories against Kalshi, and it deepens a growing circuit split that legal analysts say is heading toward the U.S. Supreme Court.

The Ruling

Kalshi filed suit in October against the Ohio Casino Control Commission (OCCC) and Attorney General Dave Yost after the OCCC issued a cease-and-desist order demanding the platform stop offering sports-event contracts in the state. Kalshi argued that the Commodity Exchange Act (CEA) grants the Commodity Futures Trading Commission (CFTC) exclusive authority over its contracts, and that state gambling law therefore cannot apply.

Morrison rejected that argument in a 21-page opinion. “History reveals no evidence that Congress intended to preempt state sports gambling laws,” she wrote. The judge found that sports-event contracts are not swaps under the CEA, and that even if they were, Kalshi had not shown federal law would override Ohio’s gambling regulations.

She described accepting Kalshi’s interpretation as “absurd.” Under that logic, she wrote, every sports bet in the country would need to be routed through a federally designated contract market, effectively shutting down licensed sportsbooks nationwide. Morrison also flagged concerns raised in amicus briefs from several tribal gaming organisations, warning that treating sports-event contracts as swaps would have “a seismic impact on Indian tribes’ authority to regulate gaming on tribal land” under the Indian Gaming Regulatory Act.

These “prediction markets” have exploded and look an awful lot like gambling. Big win for Ohio!

— Dave Yost, Ohio Attorney General

A Fractured National Legal Landscape

The Ohio decision lands in the middle of a fractured national dispute. Courts have now split on whether the CEA preempts state gambling laws, and the divergence is sharpening.

In late February, U.S. District Judge Aleta Trauger in Tennessee came to the opposite conclusion, granting Kalshi a preliminary injunction and finding the company likely to succeed on its preemption argument. That ruling — in the same federal circuit as Ohio — directly conflicts with Morrison’s position. Courts in Nevada, Maryland, and Massachusetts have sided with state regulators, while New Jersey has allowed Kalshi to continue operating.

Active cases now span Connecticut, Massachusetts, Michigan, New Jersey, New York, and Utah. Michigan became the latest state to file suit against Kalshi in state court last week. Within 24 hours of the Ohio ruling, the New York Attorney General’s Office filed it as supplemental authority in its own federal case against the platform. Connecticut followed a day later.

CFTC’s Position and the Appeal

CFTC Chair Michael Selig has publicly taken Kalshi’s side in the broader dispute. He stated earlier this year that the CFTC holds exclusive jurisdiction over prediction markets and threatened to challenge state attempts at enforcement. “They provide useful functions for society by allowing everyday Americans to hedge commercial risks,” Selig said, adding that prediction platforms “serve as an important check on our news media and our information streams.”

Morrison’s ruling implicitly pushed back on that position. The judge noted that CFTC inaction on sports-event contracts does not validate them, and that an agency’s silence cannot by itself establish federal preemption.

Kalshi confirmed it is appealing. “We respectfully disagree with the Court’s decision, which splits from a decision from a federal court in Tennessee just a few weeks ago, and will promptly seek an appeal,” a company spokesperson said. The company has already filed its appeal with the Sixth Circuit U.S. Court of Appeals. Legal analysts note that the platform will likely also seek a stay pending that appeal.

Given the volume of conflicting rulings across federal circuits, the dispute is widely expected to reach the Supreme Court. Until then, Kalshi — which reported $1bn in Super Bowl trading volume in February — faces the prospect of operating under a patchwork of state-by-state enforcement decisions, with its legal exposure expanding as courts continue to diverge.

Source: U.S. District Court for the Southern District of Ohio