U.S. District Chief Judge Sarah D. Morrison denied Kalshi’s motion for preliminary injunction in Ohio, citing her obligation to “avoid the absurd.”
Key Takeaways
- Ohio issued cease-and-desist orders to prediction markets offering sporting contracts in its jurisdiction without state licenses.
- Kalshi, one of those prediction market operators, sued Ohio, seeking to block Ohio’s order.
- The U.S. District of the Southern District of Ohio Eastern Division denied Kalshi’s motion.
Last March, the Ohio Casino Control Commission (OCCC) issued a cease-and-desist order to prediction market operator Kalshi, ordering it to stop “offering, participating in offering, or facilitating those who offer sports event contracts.” Knowing how Kalshi reacted when other states had used this tactic, the OCCC braced for a lawsuit. In October, Kalshi sued the OCCC, seeking a preliminary injunction.
On Monday, Chief Judge Sarah D. Morrison denied Kalshi’s motion. Technically, this allows the OCCC to enforce its cease-and-desist order and seek potential remedies according to Ohio sports betting laws. It is unclear if that would happen immediately, knowing that Kalshi is planning to appeal.
Prediction markets are federally regulated by the U.S. Commodity Futures Trading Commission (CFTC). The CFTC oversees exchanges that facilitate financial futures contracts or “swaps.” Some prediction markets claim that sporting events fall under the federally regulated swaps umbrella and therefore don’t need to abide by state sports betting rules and regulations. Most states, and U.S. District Court Judge Morrison, disagree.
In her ruling, Judge Morrison cited the Absurdity Doctrine, articulated by the late Supreme Court Justice Antonin Scalia, stating “courts should not construe a statute to produce an absurd result that [the court is] confident Congress did not intend.”
“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,” Judge Morrison wrote.
“This conclusion is further supported by the Court’s obligation to avoid absurdity,” Judge Morrison continued. “Ohio argues that absurd results would flow from defining a 'swap' to include a sports-event contract. The Court agrees.”
While the Court might agree, Kalshi does not.
“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,” a Kalshi spokesperson said, according to NBC News.
NEW: Kalshi has appealed the Ohio federal court decision denying its motion for preliminary injunction to the Sixth Circuit U.S. Court of Appeals. This is a prerequisite to filing a motion for a stay pending appeal, which are the next steps before Judge Morrison and then to CA6. pic.twitter.com/neBZNHttYc
— Daniel Wallach (@WALLACHLEGAL) March 10, 2026
Following an appeal from Kalshi, this case will go to the U.S. Court of Appeals. But as this is one of nearly a dozen cases involving state regulators and prediction market operators, it is likely to make its way to the U.S. Supreme Court.
