Ohio Judge Denies Kalshi Injunction, Creating Sixth Circuit Split Over Sports Event Contracts

A federal judge in Ohio has denied Kalshi a preliminary injunction against state officials, allowing Ohio to continue enforcing its sports gambling laws against the prediction market platform while the case proceeds.

The ruling marks the latest development in a series of legal battles between Kalshi and state gaming regulators over whether sports-event contracts fall under federal derivatives law or state gambling regulations.

Notably, the ruling creates a conflict within the Sixth Circuit, where another federal court recently sided with Kalshi in its dispute with Tennessee.

Court Rejects Kalshi’s Federal Preemption Argument

The dispute began in April 2025, when the Ohio Casino Control Commission (OCCC) sent cease-and-desist letters to prediction markets platforms, including Kalshi, Robinhood, and Crypto.com. The regulator claimed the platforms violated state law by offering unlicensed betting on sports contracts.

Kalshi subsequently sued the OCCC and the Attorney General’s office in October, arguing that federal law preempts Ohio’s attempt to regulate its event contracts.

The company argued that, under the Commodity Exchange Act (CEA), the Commodity Futures Trading Commission (CFTC) has exclusive authority to regulate event contracts listed on federally approved exchanges, such as Kalshi.

However, the court rejected that argument. U.S. District Court for the Southern District of Ohio Chief Judge Sarah Morrison wrote in her opinion:

“Because the Court finds that Kalshi has not carried its burden to establish that the circumstances demand such extraordinary relief, the Motion for Preliminary Injunction is DENIED.”

A preliminary injunction requires a plaintiff to show a strong likelihood of success on the merits.

Sports Contracts Likely Not “Swaps,” Court Says

As with legal battles in other states, the case focuses heavily on whether Kalshi’s sports event contracts qualify as “swaps” under the CEA. If so, they would exclusively fall under federal jurisdiction.

Judge Morrison concluded that the contracts likely fall outside the definition of swaps under federal derivatives law. She noted that federal derivatives markets typically involve financial variables, such as commodities, currency rates, and weather conditions, that directly affect commercial pricing.

While Kalshi argued that contracts based on sporting outcomes fit within the statutory definition of swaps, the court concluded that the interpretation stretched the law beyond its intended scope.

“Under Kalshi’s construction, a sports-event contract is a swap because it is a contract for payment based on the outcome of a sporting event. But if that is true, then all contracts for payment based on the outcome of a sporting event—all sports bets—would be forced onto DCMs like Kalshi and every sportsbook in the country would be put out of business.”

“Currency exchange rates, the weather, and energy costs all do that; the number of points scored in the Huskies-Bobcats game does not,” the judge wrote.

The opinion also highlighted concerns raised by 30 tribal gaming organizations that filed an amicus brief in support of the state.

The groups argued that classifying sports-event contracts as swaps could disrupt existing tribal gaming frameworks. Judge Morrison wrote that treating sports contracts as swaps could have “a seismic impact on Indian tribes’ authority to regulate gaming on tribal land.”

No Evidence of Congressional Intent

The court said there was no evidence Congress intended to preempt state sports gambling laws with an exclusive federal system when passing the CEA or later amending it through the Dodd-Frank Act.

The opinion also cited the CEA’s legislative history, writing that “at least some members of Congress believed that sports event contracts would not be considered swaps.”

According to the opinion, in 2010, Senator Blanche Lincoln (now a lobbyist for Kalshi) acknowledged that:

“[i]t would be quite easy to construct an ‘event contract’ around sporting events such as the Super Bowl, the Kentucky Derby, and Masters Golf Tournament”—but that “[t]hese types of contracts would not serve any real commercial purpose. Rather, they would be used solely for gambling.”

Decision Conflicts With Tennessee Ruling

The Ohio decision stands in contrast to a February ruling by a federal court in Tennessee, which granted Kalshi a preliminary injunction against that state’s regulators.

In that case, the judge concluded Kalshi was likely to succeed in arguing that sports-event contracts qualify as swaps regulated by the CFTC. Judge Aleta A. Trauger of the U.S. District Court for the Middle District of Tennessee ruled that an outcome can be an “event.”

“For example, the Titans won a Super Bowl, that would be a significant occurrence, something that happened or took place, and an occurrence of some importance with an antecedent cause — perhaps better coaching. Put another way, a three-hour-long game, and the Titans’ winning that game, are both occurrences of events.”

Judge Trauger added,

“President Trump winning the 2024 presidential election was an outcome, but also an event,” the Tennessee opinion noted when interpreting the statute.

Sixth Circuit Conflict Could Trigger Appellate Resolution

The conflicting outcomes are particularly notable because both courts fall within the jurisdiction of the U.S. Court of Appeals for the Sixth Circuit.

When courts within the same circuit reach different conclusions on the same legal question, it creates what lawyers call a “split.” In practice, that means the law is being interpreted differently depending on which district court hears a case, often prompting the appeals court to step in and provide a uniform interpretation.

That increases the likelihood that the Sixth Circuit will eventually need to resolve the dispute over whether sports event contracts fall under federal derivatives regulation or state gambling law.

The issue has already produced mixed results in other states. Federal courts in Maryland and Nevada and state courts in Massachusetts have ruled against Kalshi. Meanwhile, a federal court in New Jersey granted the company a preliminary injunction in April 2025. Additional cases are pending in New York and Connecticut.

With multiple appeals underway, the dispute over prediction markets and sports-event contracts could eventually reach the U.S. Supreme Court.