Kalshi’s prediction market has sued regulators in the US state of Iowa, alleging it did so because of the risk of impending enforcement of its sports event contracts.
Kalshi sued Iowa Attorney General Brenna Bird along with the Iowa Racing and Gaming Commission and its staff in federal court in Iowa, alleging that “there is a substantial risk” Bird will take enforcement action to close the company’s event contracts.
In his complaint, Kalshi said a company representative met with Byrd to discuss what he believed to be a tax bill currently being considered in the Iowa Legislature.
“Instead, he (representative Kalshi) was greeted by a panel of attorneys, including the Iowa Attorney General, who addressed a series of specific questions about whether Kalshi’s federally regulated offerings were in violation of Iowa state (preempted) law,” Kalshi said.
After the meeting, Kalshi said he contacted a representative of the Attorney General on Tuesday to make sure the Iowa AG did not intend to take legal action against Kalshi.
“The agent made no such assurance,” Kalshi said. “To the contrary, the official said in writing that “we make no guarantees about possible future performance.””
Cointelegraph has reached out to Bird’s office and the Iowa Racing and Gaming Commission for comment.
Prediction markets compete with states for sports contracts
Kalshi’s lawsuit against Iowa is the company’s latest legal action aimed at a US state regulator over whether it can offer event contracts across the US.
In the latest lawsuit, Kalshi argued that “federal law prevents Iowa from obeying Kalshi’s state law” and that, as a designated contract market, it is subject to the “exclusive jurisdiction” of the Commodity Futures Trading Commission.
The company has made a similar argument in numerous court cases with other state gambling regulators over the legality of sports event contracts.
related to: A US Senate bill targets war and assassination prediction markets
Many state regulators claim that contracts that allow users to bet on the outcome of sporting events are gambling, subject to separate state-level laws, and are offered without a license.
Federal courts vary in their response to lawsuits.
On Monday, an Ohio federal court denied Kalshi’s request to bar Ohio regulators from taking action against its sports contracts, saying the company failed to show they fell under the CFTC’s jurisdiction.
A Massachusetts federal court barred Kalshi from offering event contracts in the state earlier this year, and Nevada sued the company last month after an appeals court denied Kalshi’s request to stay the state’s action.
Conversely, federal courts in New Jersey and Tennessee sided with Kalshi to temporarily bar state regulators from taking action on the company’s sporting event contracts.
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