Summary
- Kalshi obtains a second temporary injunction from a federal court.
- Currently, the platform is successfully making its case in New Jersey.
- An increasing number of regulators are focusing on the platform.
Kalshi has successfully challenged gambling regulators twice, arguing that prediction markets fall outside their jurisdiction. Despite receiving cease-and-desist letters from the Nevada Gaming Control Board, the New Jersey Division of Gaming Enforcement, and others, Kalshi recently achieved a temporary legal victory against the New Jersey regulator.
Court sides with Kalshi and grants temporary injunction against cease-and-desist letter
Kalshi has secured a preliminary restraining order and a temporary injunction from the U.S. District Court for the District of New Jersey, following the company's initial filing. This marks the second federal court, after the U.S. District Court for the District of Nevada, to at least temporarily support Kalshi in this dispute. The purpose of a temporary injunction is primarily to allow Kalshi time to present its arguments before the court. From the beginning, Kalshi has maintained that prediction markets differ from sports gambling and should not be governed by the same legislation. Numerous regulators have issued legal notices to Kalshi, prompting the company to respond through legal action, including a recent complaint against the gambling regulator in Maryland. Kalshi operates under the Commodity Futures Trading Commission (CFTC) at the federal level, exempting it from local gambling laws and regulations. Judge Edward Kiel, in granting the injunction in favor of Kalshi, stated: I am convinced that Kalshi’s sports-related event contracts fall within the CFTC’s exclusive jurisdiction, and I am not persuaded by the defendants’ arguments otherwise. Defendants claim that sporting events lack potential financial, economic, or commercial impact. Based on the evidence presented, I disagree, wrote Judge Kiel in his ruling.
Kalshi has a track record of pushing back against regulators in courts
The recent development marks a significant early victory for Kalshi, which has been embroiled in disputes with regulators. Although the CFTC attempted to prevent Kalshi from hosting prediction markets for the US presidential election, a court ruling favored Kalshi. Since then, Kalshi has been actively expanding its platform by including various events. However, its move into the sports sector has unsettled gambling regulators, who view it as an intrusion by the prediction market. To support their position, these regulators would have to demonstrate to the courts that their cease-and-desist orders have a legitimate basis.
