Where the Preemption Fight Over Prediction Markets Stands

Litigation and regulatory attorney Johnny ElHachem authored an article for Law360 discussing the legal landscape surrounding federal preemption of state gambling laws under the Commodity Exchange Act. He opens by analyzing the U.S. Court of Appeals for the Third Circuit's landmark decision in favor of exchange platform Kalshi holding the Commodity Exchange Act preempts state gambling laws as applied to sports-related event contracts. The article then explores how diverging appellate rulings across other jurisdictions are creating a fragmented regulatory environment, with courts taking opposing views on swap classification and the scope of federal authority. Mr. ElHachem also underscores the broader implications for prediction market platforms as ongoing litigation and government enforcement actions accelerate the likelihood of U.S. Supreme Court review.

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