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Kalshi sued the Missouri Gaming Commission and several state officials Wednesday, seeking to block enforcement against its prediction market. The company argues federal law gives the Commodity Futures Trading Commission exclusive jurisdiction over its event contracts.
The lawsuit was filed in the Eastern District of Missouri. It follows a cease-and-desist letter accusing Kalshi and other prediction markets of offering illegal sports wagering.
Missouri Demands Compliance With Gambling Laws
Missouri Atty. Gen. Catherine Hanaway sent the letter last month. It demanded compliance by Oct. 16 and threatened legal action if Kalshi did not comply.
According to Kalshi’s lawsuit, Missouri’s demands would require it to stop operations or obtain a Missouri Gaming Commission license. Licensing would also mean paying state taxes and fees and ending access for Missouri adults under 21.
The Missouri Attorney General’s Office said sports-related transactions should face the same rules through prediction markets as through casinos.
Missouri argues that Kalshi’s event contracts are not swaps under the Commodity Exchange Act. Hanaway also wrote that Missouri shares the view of a majority of federal courts that Kalshi’s platform falls under state gambling laws.
Kalshi Argues Federal Law Preempts State Enforcement
Kalshi’s challenge rests on the Commodity Exchange Act. The company argues the law gives the CFTC exclusive jurisdiction over certain instruments traded on designated contract markets.
Kalshi also says stopping operations could conflict with the CFTC’s impartial access requirement. Its lawsuit challenges Missouri’s authority to impose the licensing and operating conditions described in the letter.
“The supremacy clause does not tolerate that result,” Kalshi says in the lawsuit.
The defendants include Hanaway, the Missouri Gaming Commission, Executive Director Michael A. Leara and the commission’s five members. Kalshi is seeking an injunction blocking enforcement of the cease-and-desist letter.
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Source: As reported by Big News Network.com.
