Kalshi intensified its legal battle regarding its prediction market operations by filing lawsuits against the gaming regulators of Nevada and New Jersey last weekend. This move follows cease-and-desist letters issued by these states. In a LinkedIn post on Sunday, Kalshi CEO Tarek Mansour emphasized that prediction markets serve as more than just trading venues; he referred to them as 'quintessential truth machines.' He asserted that they effectively harness the principles of free financial markets to seek unbiased truths.
Mansour characterized the lawsuits against the regulatory agencies of two of the largest sports betting markets in the United States as a necessary last resort. He noted, 'We have made every effort to engage proactively with both Nevada and New Jersey and try to educate them about prediction markets, how they are regulated and how critical they are… but our words fell on deaf ears.'
As of Monday morning, Kalshi’s website reported $323 million in traded contracts for the men’s NCAA Tournament. The figure for the women’s NCAA Tournament stood at $56.3 million.
In its lawsuit against New Jersey Division of Gaming Enforcement interim director Mary Jo Flaherty, New Jersey attorney general Matthew Platkin, and the New Jersey Casino Control Commission, Kalshi addresses the reasons the NJDGE issued cease-and-desist orders last week. The filing, submitted to the US District Court in New Jersey, argues that the NJDGE’s demand to immediately terminate contracts in New Jersey would expose Kalshi to state regulations that the Commodities Futures Trading Commission (CFTC) was specifically established to prevent. Kalshi contends that the supremacy clause of the Constitution overrides the NJDGE’s actions since Congress has fully regulated futures derivatives on CFTC-approved exchanges, and such actions would conflict with federal policy.
Kalshi seeks both declaratory and injunctive relief to prevent the enforcement of these overridden laws. Additionally, the lawsuit requests an emergency temporary restraining order and a preliminary injunction to avert immediate and irreparable harm stemming from the defendants’ actions.
