Kalshi suffered a major setback as the Second Circuit appeals court upheld lower-court rulings against the prediction market, denying its request for a preliminary injunction. The three-judge panel ruled that Kalshi failed to demonstrate it was likely to succeed on the merits, rejecting its claim that its platforms do not constitute gambling. The court also declined to overturn Coinbase’s similar loss against Connecticut.
This follows a September ruling by the Sixth Circuit, where judges unanimously affirmed that Ohio and Tennessee can enforce their gambling laws against Kalshi. Despite these defeats, the Trump administration has taken Kalshi’s side, with the CFTC suing ten states—including Arizona, New York, and Illinois—arguing it has sole authority to regulate prediction markets like Kalshi and Polymarket. Kalshi’s most significant victory came in April, when the Third Circuit ruled that New Jersey cannot regulate sports bets on its platform, classifying its contracts as federally regulated swaps.
However, other courts have disagreed, asserting that some wagers are not swaps and that both state and federal governments may regulate prediction markets. New Jersey has asked the Supreme Court to review the Third Circuit’s decision, with 39 other states and D. C. supporting the petition.
Source: Ars Technica · Summarized by HeadlinesBriefing