WASHINGTON, D.C.— Dominick Freda, Legal Director of Better Markets, issued the following statement regarding the decision in KalshiEX LLC v. Schuler, Nos. 26-3196/5235 (6th Cir.), rejecting Kalshi’s attempts to deny that state gaming laws apply by calling its betting “swaps”: 

“Today, the Sixth Circuit joined the Ninth Circuit in recognizing what we have been arguing for years now: that Kalshi’s event contracts on sporting events are not swaps and are not properly regulated by the CFTC, and state gambling laws are not preempted. Consistent with what we told the Court in our amicus brief, the Court saw right through Kalshi’s baseless claim that its sports wagers and gambling were derivatives subject to exclusive CFTC jurisdiction. 

“In ruling that Kalshi’s sports-event contracts are not swaps, the Sixth Circuit stated explicitly that ‘Kalshi’s reading would give the CFTC jurisdiction over event contracts that bear no relation to the goals Congress had in mind’ when it adopted rules governing the CFTC’s regulation of event contracts. Indeed, the Sixth Circuit said that ‘under Kalshi’s preferred reading, there is no limit to the type of chance-based contract’ that would constitute a financial derivative subject to the CFTC’s jurisdiction rather than state gambling laws.  

“Moreover, as did the Ninth Circuit, the Sixth Circuit court rightly rejected Kalshi’s about-face on this issue. It recognized that Kalshi previously disclaimed the idea that event contracts on sporting events were swaps. The Court wasn’t fooled by Kalshi’s 180-degree flip-flop change in position, recognizing that Kalshi was right two years ago, and its unsupported contrary position now is just plain wrong. 

“As was the Ninth Circuit’s ruling, this is another common-sense decision that is a decisive win for the rule of law and for every state that has built a regulatory regime to protect its citizens from gambling harms. This decision is just one of many expected to be issued by courts presiding over states’ attempts to enforce their gaming laws against Kalshi and other so-called prediction markets. Better Markets has supported state and tribal efforts to protect consumers from unregulated gambling since these online gambling dens unleashed unregulated nationwide betting years ago, and we will continue to do so.” 

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Better Markets is a non-profit, non-partisan, and independent organization founded in the wake of the 2008 financial crisis to promote the public interest in the financial markets, support the financial reform of Wall Street and make our financial system work for all Americans again. Better Markets works with allies—including many in finance—to promote pro-market, pro-business and pro-growth policies that help build a stronger, safer financial system that protects and promotes Americans’ jobs, savings, retirements and more. To learn more, visit www.bettermarkets.org.