The Sixth Circuit U.S. Court of Appeals has rejected Kalshi’s request to prevent Ohio from implementing its sports betting regulations, thus permitting state regulators to take action against the firm while its legal challenge is ongoing.

In a ruling issued on April 24, a panel of three judges determined that Kalshi did not satisfy the legal requirements for temporary injunctive relief, although they recognized that the matter involves complex legal questions regarding the division of power between federal and state jurisdictions.

“This division of powers clearly indicates that Kalshi has raised substantial questions regarding the merits,” the judges stated.

Furthermore, they indicated that the company’s arguments did not provide sufficient grounds for stopping enforcement actions at this point. “At this time, our assessment of the preemption claims is generally balanced (if not slightly favoring Ohio),” the panel remarked.

This decision enables Ohio regulators to proceed with punitive measures, which include a proposed $5 million penalty from the Ohio Casino Control Commission for allegedly running an unauthorized sports betting service.

Simultaneously, the panel directed that Kalshi’s appeal be expedited, offering some respite as the larger legal conflict unfolds.

The case is part of a broader conflict concerning whether prediction market platforms are exclusively regulated by the Commodity Futures Trading Commission or if they can also be governed by state gambling laws.

Conflicting rulings from courts across the U.S. have emerged regarding whether the Commodity Exchange Act supersedes state regulations.

The position taken by the Sixth Circuit may lead to a confrontation with the U.S. Court of Appeals for the Third Circuit, which has shown a more supportive stance towards similar preemption claims in a separate case.

The differences between the appellate courts could heighten the chances of this matter escalating to the U.S. Supreme Court.

A prior ruling from a federal judge indicated that Kalshi is unlikely to prevail in its lawsuit against Ohio.

The panel comprised Senior Judge Alice M. Batchelder, Judge Eric E. Murphy, and Judge Kevin G. Ritz.