A US appeals court ruled Friday that Ohio and Tennessee can apply their gambling laws to prediction market operator Kalshi, deepening a split among federal courts.

The 6th US Circuit Court of Appeals in Cincinnati unanimously rejected Kalshi’s argument that its sports event contracts are ‘swaps’ under federal commodities law. Circuit Judge Julia Smith Gibbons wrote that Kalshi did not show the contracts fall within the exclusive jurisdiction of the Commodity Futures Trading Commission.

The panel also held that the federal Commodity Exchange Act does not preempt state gambling laws. The ruling overturned a Tennessee injunction that had favored Kalshi and upheld an Ohio court’s refusal to grant one.

Kalshi said it expects the decision to be overturned. ‘Markets can’t operate when the rules change at every state line,’ spokesperson Dani Lever said.

The decision deepens a circuit split over who regulates prediction markets: states or the CFTC. Two other appeals courts have ruled differently, raising the chance the Supreme Court takes up the issue.

Kalshi lost a similar case in August over Nevada gambling laws. It won a New Jersey case in November, though that state is appealing.