Ohio Judge Blocks Kalshi’s Preliminary Injunction Motion

• An U.S. District Court Judge has ruled against Kalshi’s motion for a preliminary injunction against Ohio and its gambling commission
• Kalshi recently filed a lawsuit against the Ohio Casino Control Commission and Attorney General in federal court
• Kalshi has already confirmed it will appeal the decision

A U.S. District Court Judge has ruled against a motion from Kalshi for a preliminary injunction against the Ohio Casino Control Commission and the state’s Attorney General.

U.S. District Court Judge Sarah D. Morrison denied the prediction market company’s motion for a preliminary injunction. In her decision, Morrison backed the state’s interpretation of the Commodity Exchange Act (CEA), claiming it does not govern sports-event contracts.

If the preliminary injunction had been awarded to Kalshi, the company would have legally been able to offer its sports event contracts in the state through the course of its lawsuit.

Kalshi Preparing to Appeal Decision

A Kalshi spokesperson confirmed to Sports Betting Dime the prediction market company will seek an appeal of the decision.

“We respectfully disagree with the court’s decision, which splits from a decision from a federal court in Tennessee just a few weeks ago, and will promptly seek an appeal,” the spokesperson reported.

The initial lawsuit, filed in October in the U.S. District Court for the Southern District of Ohio, claims the Ohio Casino Control Commission and Attorney General threatened criminal penalties against Kalshi unless it shuts down event contracts in the state by late October. Additionally, Kalshi reported the Ohio Casino Control Commission sent a letter to licensed sports betting operators on Aug. 25, threatening to revoke Ohio gaming licenses for any operator who partners with Kalshi, even if the partnership occurs in other states.

These actions, Kalshi counsel wrote in the lawsuit, “threaten immediate and irreparable harm, not just to Kalshi but to its customers and commercial counterparties,” leading the company to seek a preliminary and permanent injunction from the two agencies to continue offering its prediction markets in the state.

However, in her decision Morrison disagreed with Kalshi’s interpretation the CEA, reporting Ohio’s better serves the purpose of the statute.

“By enacting the CEA, Congress sought to serve the national public interest of ‘managing and assuming price risks, discovering prices, or disseminating pricing information’ by establishing a system to deter market disruptions, ensure financial integrity, avoid systemic risk, protect market participants from fraud and abuse, and promote responsible innovation. These goals are better achieved when a “swap” is understood as a transaction involving financial instruments and measures that traditionally and directly affect commodity prices. Currency exchange rates, the weather, and energy costs all do that; the number of points scored in the Huskies-Bobcats game does not,” she reported.

Court’s Job to Avoid Absurdity

Furthermore, Morrison said it is the court’s obligation to “avoid absurdity.” Ohio, she said, argues that absurd results would flow from defining a swap to include sports-event contracts.

The court agreed with the state’s assessment. Morrison said under Kalshi’s interpretation, 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. In the absence of congressional intent to effect such a sea change, that result is absurd.”

Weeks After Tennessee Injunction

The Ohio decision came nearly three weeks after U.S. District Court Judge Aleta A. Trauger granted Kalshi’s motion for a preliminary injunction in Tennessee. The preliminary injunction allows Kalshi to continue offering its prediction contracts, including the controversial sports event contracts, during the course of its lawsuit against the Tennessee Sports Wagering Council.

Kalshi filed a lawsuit against the state after the Tennessee Sports Wagering Council issued a cease-and-desist against the company in January regarding its sports event contracts.