Kalshi sues Missouri Gaming Commission, says only the CFTC can regulate prediction markets
Kalshi has filed suit against the Missouri Gaming Commission and state officials, arguing federal law gives the CFTC exclusive jurisdiction over its event contracts. Missouri's attorney general says the contracts are sports bets under state law.
GamblingSource: GamblingNews
Prediction market operator Kalshi has taken legal action against the Missouri Gaming Commission and several state officials, claiming that oversight of prediction markets belongs solely to the federal Commodity Futures Trading Commission rather than to the state.
The suit follows cease-and-desist letters that Missouri Attorney General Catherine Hanaway sent last month to Kalshi and other prediction market platforms. The letters alleged that the companies were offering illegal sports betting. Kalshi responds that the Commodity Exchange Act grants the CFTC exclusive jurisdiction over financial instruments, including swaps, traded on designated contract markets. It also relies on the Supremacy Clause of the US Constitution, which generally places federal law above conflicting state law.
According to Kalshi, the letter left it with two options: stop operating in Missouri, or obtain a license from the Missouri Gaming Commission, pay all applicable state taxes and fees, and limit access to users aged 21 and over. The letter set an October 16 compliance deadline and warned that missing it could lead to legal action.
Missouri disputes Kalshi's reading of federal law. Hanaway's letter argued that Kalshi's event contracts do not qualify as swaps under the Commodity Exchange Act and that the act does not preempt state gambling rules in this area. She said her position matches that of most federal courts, which have found that Kalshi's sports wagering platform is subject to state gambling laws.
A spokesperson for the Attorney General's Office said sports betting should face the same rules whether wagers are placed on an online prediction market or at a traditional casino. The spokesperson said both are sports betting and therefore fall under the licensing and taxation requirements approved by Missouri voters. The office added that it expects federal courts not to stop the attorney general from enforcing state law.
The Missouri case is the latest in a series of disputes between prediction market operators and state gambling regulators. Kalshi sued Louisiana last week in an effort to block enforcement of that state's gambling laws. This week Utah also filed 14 criminal charges against Kalshi and its co-founders, accusing the company of violating state gambling law by letting users bet on sporting events.
Based on reporting by GamblingNews.