4 state gambling powers at stake in Kalshi’s prediction-market fight

That distinction matters because the law gives the Commodity Futures Trading Commission, or CFTC, exclusive authority over swaps traded on designated contract markets. Kalshi argues that states therefore cannot apply their gambling laws to its exchange. The CFTC supports the federal-jurisdiction position and has challenged some state enforcement efforts in court.

Licensing lets states set conditions for operators offering sports wagers. If those laws apply to Kalshi’s contracts, states can seek to enforce the associated requirements. If Kalshi’s federal argument prevails, state gambling licenses may not be required for the contracts at issue.

On Sept. 25, the Sixth Circuit ruled that Kalshi had not shown its sports-event contracts in the Ohio and Tennessee cases were swaps covered by the CFTC’s exclusive jurisdiction. It also held that federal law did not override the gambling laws at issue in those states.

The Ninth Circuit ruled against Kalshi’s effort to block Nevada from enforcing its gambling laws on Aug. 28. But in an April 6 ruling involving New Jersey, the Third Circuit found Kalshi likely to succeed on its argument that federal law preempts the state’s gambling laws as applied to its sports-event contracts. Those rulings concern particular disputes; they do not settle the status of every prediction-market product nationwide.

Can states tax these sports-event contracts under gambling law?

The state sports-gambling laws discussed by the Sixth Circuit include tax obligations. Whether a state can impose them on Kalshi’s sports-event contracts depends on whether its gambling law applies to those contracts. The available findings do not establish a tax amount Kalshi owes under those laws.

The state role in sports betting has a different history from federal oversight of derivatives. In 2018, the Supreme Court struck down a federal restriction that had largely prevented states from authorizing sports gambling. States have their own sports-wagering rules; Kalshi argues that federal law takes precedence for contracts traded on its CFTC-regulated exchange.

In July, attorneys general from 44 states argued that the CFTC’s proposed prediction-market rule exceeded federal authority. They urged the agency to write a new rule consistent with the Commodity Exchange Act and the Constitution. Their letter is a challenge to the agency’s approach, not a ruling on the proposal.

Can states set age and location requirements for bettors?

State rules can determine who is eligible to place a sports wager. Under the laws discussed by the Sixth Circuit, Ohio sets the minimum age at 21 and Tennessee at 18. Both states require sports bettors to be physically within their borders.

Those are requirements in two states, not a national rule for prediction markets. If state gambling law applies to the sports-event contracts in question, officials can seek to enforce such conditions. If federal law displaces it, that route to enforcement could be limited.

Kalshi’s argument is that a federally regulated exchange should not face separate state gambling rules for the same contracts. States contend that federal oversight of financial products does not automatically displace their authority over what they consider sports betting. The differing appeals court decisions show why neither position is settled nationwide.

Which consumer protections can states enforce?

State gambling laws can impose consumer-protection requirements alongside licensing and tax rules. The public-interest question is what enforceable safeguards people using sports-event markets receive, regardless of which regulator has authority. The available information does not establish whether federal and state frameworks provide equivalent protections in practice or explain users’ full complaint procedures across markets.

Kalshi’s lobbying is part of that debate, but lobbying alone is not proof of improper influence. OpenSecrets reported that the company’s efforts reached governors’ and attorneys general’s offices. Filings examined by OpenSecrets show that, in the first half of 2026, the company contributed $170,000 to the Democratic Attorneys General Association and $147,500 to the Republican Attorneys General Association. It also contributed $150,000 to the Democratic Governors Association and $100,000 to the Republican Governors Association.

As Truthout reported, Kalshi spokesperson Dani Lever wrote to OpenSecrets, “Like many U.S. regulated companies, we support candidates on both sides of the aisle” — an explanation of the company’s bipartisan giving. The contributions do not establish that an official changed a position, and a lobbying contact does not establish Kalshi’s position on every provision of a state bill.

The conflicting court rulings leave a consequential question open: when a federally overseen contract resembles a sports wager, which government can enforce the rules protecting the person who places it?