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Rules and licensingUS court hands Ohio and Tennessee power to police Kalshi
A federal appeals court ruled that Ohio and Tennessee can apply local gambling laws to prediction markets.
Written by the BettingEdgeHub desk, 8 October 2026
State regulators secured a major victory when a federal appeals court ruled against Kalshi. The court decided that local authorities have the right to enforce gambling laws on prediction platforms. This creates a challenging situation for betting operators trying to offer products nationwide.
Federal rules versus state powers
Kalshi argued that its products function as financial swaps regulated federally by the Commodity Futures Trading Commission. Company representatives stated that a patchwork of state rules makes it impossible to operate smoothly. However, the court disagreed and protected state authority.
Sports contracts under scrutiny
The legal battle centers on sports event contracts that resemble standard betting markets. Judges questioned how predicting match statistics advances national financial interests. The court emphasized that states hold the exclusive right to decide what constitutes gambling.
Impact on young bettors
State authorities raised concerns because prediction platforms often allow users to participate at a younger age than traditional sportsbooks. While federal courts have issued conflicting opinions in different regions, this specific ruling empowers local regulators.
Future of prediction markets
The ongoing legal fights highlight the friction between financial regulators and state gaming boards. Operators now face a divided market where local rules can override federal arguments. This uncertainty affects how alternative betting products launch across the country.
Punters should expect more state level crackdowns on prediction platforms offering sports event contracts.