TL;DR:
- The CFTC filed an amicus curiae brief with the Sixth Circuit Court of Appeals to challenge Ohio’s authority over prediction markets.
- The federal regulator has initiated similar legal actions against five other states, including New York, Illinois, and Arizona, during recent months.
- The dispute arises following a 2025 lawsuit by Ohio that labeled the platform’s operations as unauthorized sports betting under state laws.
The Commodity Futures Trading Commission (CFTC) has formally intervened in the legal dispute between the prediction market platform Kalshi and the authorities of the state of Ohio.
Last Tuesday, the federal agency filed an amicus curiae brief before the United States Court of Appeals for the Sixth Circuit. According to the commission’s official document, the goal is to correct a previous ruling that granted Ohio state officials the power to regulate these markets under sports betting regulations.
The controversy escalated after Federal Judge Sarah D. Morrison denied a preliminary injunction request filed by the company in March. In her ruling, the judge suggested that Congress did not intend to “overrule state laws on sports gambling,” an interpretation that the federal regulator rejects.
Jurisdictional Conflict Between the CFTC and the States
CFTC Chairman Michael Selig stated that the district court took an “unduly narrow” view of the commission’s powers. Selig affirmed that the agency will not allow state governments to undermine the authority that the body has historically exercised over these derivative financial markets.
This legal move in Ohio is not an isolated case within the current regulatory landscape. During the first half of 2026, the CFTC has maintained active litigation against Wisconsin, Illinois, Arizona, Connecticut, and New York with the aim of consolidating its exclusive oversight.
Prediction markets are experiencing a massive surge in trading volume following the 2024 U.S. election cycle. According to CFTC data, these platforms operate under a federal framework because transactions cross state lines, necessitating a single national regulator.
On the other hand, state opposition has organized through a coalition led by New York Attorney General Letitia James, along with 37 other attorneys general. This bloc maintains that prediction platforms cannot ignore local consumer protection laws and gambling prohibitions.
Selig’s proposal seeks to implement standardized rules that recognize these contracts as financial instruments under the CFTC statute. The regulator’s documents suggest that allowing each state to apply its own gambling laws would create a technical fragmentation affecting the liquidity and transparency of the ecosystem.
The next step in this legal process will be the review of arguments by the Sixth Circuit Court of Appeals, whose decision will set a precedent on whether event contracts should be treated as financial derivatives or as bets under state control.
