From Ars Technica · · 2m
Kalshi's court losses mount over gambling law fights
Two appeals courts reject the prediction market's bids to block state gambling laws as Arkansas files a new lawsuit.
In brief
Two appeals courts reject the prediction market's bids to block state gambling laws as Arkansas files a new lawsuit. Prediction market Kalshi lost appeals in two federal circuits trying to block state gambling laws, while Arkansas filed a new lawsuit alleging illegal wagering. Originally reported by Ars Technica.
Two courts reject Kalshi's blocking bids
The Ninth Circuit and Second Circuit appeals courts both rejected Kalshi's attempts to block state gambling laws in Connecticut, New York, and Nevada this week.
Arkansas sues over illegal wagering
Arkansas Attorney General Tim Griffin filed a lawsuit against Kalshi, saying the platform violates state law by offering gambling to people as young as eighteen.
The core legal dispute
Kalshi claims its products are federally regulated swaps under CFTC authority. States argue they are gambling and subject to state law regardless of how Kalshi labels them.
Griffin's specific allegations
Griffin said Kalshi let customers wager on sporting and entertainment events without licenses, taxes, or compliance with state restrictions. Arkansas law requires a minimum age of twenty-one for electronic wagering.
“gambling on an unregulated platform is squarely prohibited by Arkansas law”
Ninth Circuit rejects Kalshi's rehearing bid
In August, the Ninth Circuit ruled Nevada can stop Kalshi from allowing sports bets, finding they are not swaps. Kalshi sought a rehearing before all twenty-nine judges. None supported it.
Second Circuit upholds lower court losses
The Second Circuit upheld district court rejections of Kalshi's requests for preliminary injunctions against New York and Connecticut enforcing their gambling laws.
“Appellants have failed to make the required showing that an injunction pending appeal is warranted”
Trump administration backs Kalshi
The CFTC, claiming sole authority to regulate platforms like Kalshi and Polymarket, has sued Arizona, Connecticut, Illinois, Kentucky, Minnesota, New Mexico, New York, Rhode Island, Utah, and Wisconsin.
Kalshi's one major win
In April, the Third Circuit ruled New Jersey cannot regulate sports bets on Kalshi, deciding the wagers meet the federal definition of swaps and fall under CFTC jurisdiction.
“Kalshi's sports-related event contracts are swaps traded on a CFTC-licensed DCM, so the CFTC has exclusive jurisdiction”
Supreme Court may decide the issue
New Jersey asked the Supreme Court to reverse its Third Circuit loss. Thirty-nine other states and the District of Columbia filed a brief supporting New Jersey's petition.
The takeaway
Prediction market Kalshi lost appeals in two federal circuits trying to block state gambling laws, while Arkansas filed a new lawsuit alleging illegal wagering.
