The Sixth Circuit ruled on September 25 that Ohio and Tennessee can enforce their gambling laws against Kalshi’s sports contracts. The court found geofencing to be a workable compliance solution and rejected Kalshi’s argument that state-by-state compliance would conflict with its duties as a federally regulated exchange. The decision directly threatens Kalshi’s business model, as 69% of its retail sports demand comes from states without legal online sportsbooks, including 44% from California and Texas alone. The Supreme Court was petitioned by New Jersey on September 2 to resolve the jurisdictional conflict between federal and state gambling laws. US sports prediction market execution volume reached $31.1 billion in the third quarter, and EKG now ranks state-by-state market contraction as the industry’s top near-term policy risk.
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