Ohio delivered a one-two punch to Kalshi in early 2026: a federal court ruling that the platform’s sports event contracts amount to gambling, and a state regulatory penalty of $5 million for unlicensed sports wagering. Together, the actions made Ohio the most aggressive state response to a prediction-market sports betting platform to date.
For the four New Mexico tribes pursuing their own federal Kalshi suit, the Ohio judge’s reasoning is exactly the kind of merits ruling they hope to replicate.
What Judge Morrison ruled
In March 2026, U.S. District Judge Sarah Morrison denied Kalshi’s motion for an injunction against the Ohio Casino Control Commission (OCCC), finding that the company’s sports event contracts function as sports gambling under Ohio law — not as commodity swaps under federal CFTC jurisdiction.
The judge’s reasoning cut to the definitional core of the dispute. As reported by NBC News, Morrison wrote that swaps are “understood as a transaction involving financial instruments,” while:
“The number of points scored in the Huskies-Bobcats game does not [fit that definition].”
In other words: a contract whose value depends on an athletic outcome is structurally different from a contract whose value depends on a financial instrument or commodity. The court was unwilling to extend the Commodity Exchange Act to sports outcomes simply because they trade on a CFTC-registered exchange.
The $5 million penalty
Separately from the federal court action, the Ohio Casino Control Commission issued notice to KalshiEx LLC accusing the company of offering services equivalent to illegal sports betting through its binary event contracts. The OCCC indicated it would pursue a $5 million penalty for operating as an unlicensed sports wagering operator in the state.
This was a regulatory enforcement action — distinct from a court ruling — and was reported by PlayUSA, Crowdfund Insider, and other industry outlets in March-April 2026.
Kalshi’s appeal and the CFTC’s intervention
Kalshi appealed the Ohio federal court decision to the Sixth Circuit Court of Appeals. On May 12, 2026 — the same day four New Mexico tribes filed their own federal Kalshi suit — the CFTC filed an amicus brief in the Sixth Circuit explicitly backing Kalshi’s preemption argument, arguing that prediction markets qualify as swaps under the Commodity Exchange Act and fall under the CFTC’s “exclusive jurisdiction.”
The CFTC’s filing was part of a coordinated 2026 federal defense of prediction-market preemption, which has also included amicus briefs in the Ninth Circuit (February 17, 2026) and the Massachusetts Supreme Judicial Court (April 24, 2026).
Why Ohio matters for NM
The Ohio federal court ruling is on-point precedent for the NM tribes’ federal Kalshi suit in three ways:
- Same posture. Both involve a state or tribe arguing Kalshi’s sports event contracts violate gambling regulation, and Kalshi arguing CFTC preemption.
- Merits ruling, not interim. Judge Morrison’s reasoning addressed the substantive question of whether sports outcomes are “swaps.” Most federal Kalshi rulings have been preliminary procedural orders. Morrison’s analysis goes further.
- Appeal in motion. The Sixth Circuit appeal puts Ohio on a fast track. A pro-state ruling there would split with the Third Circuit’s pro-Kalshi ruling and substantially raise the odds of Supreme Court review by late 2026.
How NM’s case differs
NM’s tribal complaint adds an Indian Gaming Regulatory Act (IGRA) and tribal sovereignty dimension that Ohio’s case doesn’t. That makes the legal arguments distinct in important ways — federal Indian law has its own preemption framework — but the underlying definitional question (is a sports event contract gambling?) is the same. If federal courts increasingly conclude the answer is yes, the NM tribes’ path gets easier even if the Third Circuit’s preemption ruling stands.
What it means for NM bettors
None of this changes the legal options at NM tribal sportsbooks. The five legal NM sportsbooks — Santa Ana Star, Isleta + BetMGM, Inn of the Mountain Gods, Buffalo Thunder, and Route 66 — continue to operate retail-only. Online sports betting in NM remains illegal, and Kalshi remains accessible in NM despite the May 12 tribal suit because no court has yet ordered an NM-specific injunction.