An Ohio federal court has denied a motion filed by prediction markets platform Kalshi for a preliminary injunction against Ohio state authorities over allegations that the company was operating in violation of gambling laws.

In an order filed Monday, US District Court for the Southern District of Ohio Chief Judge Sarah Morrison denied Kalshi’s request for an injunction that would have blocked the Ohio Casino Control Commission and state attorney general from regulating contracts on the platform, specifically for sports betting.

According to the judge, Kalshi had failed to show that the sports event contracts available on the platform were subject to the “exclusive jurisdiction” of the Commodity Futures Trading Commission (CFTC).

“Even if this Court were to find that sports-event contracts are swaps subject to the CFTC’s exclusive jurisdiction, Kalshi has not shown that the [Commodity Exchange Act, or CEA] would necessarily invalidate Ohio’s sports gambling laws,” the opinion and order said, adding:

“Kalshi argues that Ohio’s sports gambling laws are conflicted and are being conflicted by the CEA when it comes to contracts for sporting events traded on its exchange […] Kalshi failed to show that Congress intended the CEA to invalidate state sports gambling laws.

The denial broke with the narrative of CFTC Chairman Michael Selig, who said in February that the federal regulator had “exclusive jurisdiction” over prediction markets and threatened lawsuits against any authority claiming otherwise. Kalshi and the prediction platforms are facing lawsuits in other U.S. states over similar allegations of unlicensed sports betting.

“The Court makes no attempt to explain why the CFTC failed to exercise its authority […] with respect to sporting event contracts,” Ohio’s Monday filing said. “However, the agency’s inaction is not evidence that sporting event contracts are regulated or permissible under the CEA – and the Court found that they are not.”

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In a statement to Cointelegraph, a Kalshi spokesperson said the company “respectfully disagrees with this opinion[d] with the Court’s decision, which differs from the federal court’s decision in Tennessee just a few weeks ago, and we will file an appeal without delay.”

CFTC guidance on prediction markets may emerge

Last week, Selig said the federal regulator was working to provide guidance on prediction markets “in the near future.” The CFTC chairman is the only Senate-confirmed commissioner on a panel that usually consists of five people.

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