Ohio court leaves election betting rules uncertain for seven states

Ohio appeals court ruling on Kalshi leaves seven-state preemption fight open

In a federal courtroom in Nashville, Underdog's lawyers filed papers this month arguing that the Commodity Futures Trading Commission's jurisdiction over event contracts forecloses state enforcement entirely. The argument is the same one Kalshi has been making in Ohio, the same one Crypto.com and Novig are now pressing in Missouri, and the same one that a rotating cast of prediction market operators has advanced in Washington, Connecticut, Massachusetts, New Mexico, and Wisconsin. Seven states. One theory. No resolution.

The Ohio appeals court's decision to deny Kalshi's bid — with a rehearing petition still pending — is the most instructive data point in this litigation wave, and not for the reason most commentary has suggested. The denial does not mean preemption fails. It means the court found the procedural posture insufficient to reach the merits at that stage. Those are different findings, and conflating them is how markets get the legal picture wrong.

The Supremacy Clause analysis that will eventually resolve this turns on a specific question under the Commodity Exchange Act: whether CFTC designation of a contract market creates field preemption or only conflict preemption. Field preemption would render state enforcement void on contact. Conflict preemption requires showing that compliance with state law makes federal compliance impossible, or that state law obstructs a federal objective. Underdog's Tennessee complaint, as reported, appears to press the stronger version — field preemption — which is the harder argument to win and the more durable one if it succeeds.

What the current litigation map reveals is a CFTC that has not yet moved to affirmatively protect the operators it has licensed. That restraint is itself a legal fact. Courts examining preemption arguments look to agency conduct as evidence of congressional intent. An agency that issues licenses but declines to file amicus briefs or initiate enforcement proceedings in support of its licensees sends a signal that the field is not as occupied as the operators claim. Whether the Commission has taken a public position on the Tennessee or Missouri suits is not on the public record as of this writing.

The Missouri case is structurally interesting because Crypto.com and Novig chose to sue rather than withdraw, while Kalshi, Polymarket, and Robinhood held off. That split is not a difference in legal theory — it is a difference in appetite for injunctive relief at this stage. Operators who wait preserve optionality; they can enter a state the moment a favorable ruling creates an opening without having their own litigation posture complicate the record. Operators who sue now are betting that a favorable preliminary injunction in one circuit reshapes the enforcement calculus in six others.

The legal standard that governs all of it is whether Congress, in enacting the Commodity Exchange Act and its Dodd-Frank amendments, intended to occupy the field of sports event contract regulation to the exclusion of state gambling law. That intent is found in statutory text, legislative history, and agency interpretation — in that order, and with that weight.