Kalshi Files Reply Brief, Says State Regulation Conflicts with Federal Law

Prediction market platform Kalshi has filed a reply brief in its legal battle with the New Jersey gambling regulator, contending that federal law supersedes state regulation. 

The filing was first reported by legal expert Daniel Wallach on X this morning. 

In the post, he highlighted that Kalshi’s reply reasserted  that there is “overwhelming evidence that Congress, in the Commodity Exchange Act, sought to preempt state regulation of trading on designated contract markets (‘DCMs’) like Kalshi.”

Kalshi Argues for Federal Supremacy Under the Commodity Exchange Act

Kalshi continues to stand its ground, stubbornly arguing that the CFTC is its sole regulator, and the only regulator with which it is legally obliged to conform. 

The firm says that allowing states to prohibit contracts approved by the CFTC would conflict with uniform federal law regulating DCMs.

However, as Wallach points out, the CFTC has failed to enforce its rules, as Rule 40.11(a)(1), which Kalshi previously recognized, includes wording prohibiting ‘gaming’ contracts. 

Kalshi’s legal conflict with New Jersey started when the state, alongside Nevada, Maryland, Ohio, Montana, and Tennessee, sent cease-and-desist orders to the platform. 

The states have each informed Kalshi that sports event contracts breach specific state regulations and ordered Kalshi to cease operations.

A Growing Coalition Against Sports Event Contracts

Kalshi has pushed back, arguing that federal regulation supersedes state-specific regulation and that authorities are causing “irreparable harm” to Kalshi’s business. It has currently taken action against Nevada, Maryland, and New Jersey. 

With time, more states are joining the pushback against Kalshi and other platforms offering similar products, such as Crypto.com and Robinhood. 

Kalshi’s attitude does not seem to change, with the company’s CEO, Tarek Mansour, stating during a StrictlyVC event in San Francisco that it remains “not very concerned.” 

As the legal battle continues to rage on, analysts anticipate that federal and state regulators could clash at some point. The CFTC is undertaking roundtable discussions around sports event markets imminently. 

The post Kalshi Files Reply Brief, Says State Regulation Conflicts with Federal Law appeared first on CasinoBeats.

 Prediction market platform Kalshi has filed a reply brief in its legal battle with the New Jersey gambling regulator, contending that federal law supersedes state regulation.  The filing was first reported by legal expert Daniel Wallach on X this morning.  In the post, he highlighted that Kalshi’s reply reasserted  that there is “overwhelming evidence that
The post Kalshi Files Reply Brief, Says State Regulation Conflicts with Federal Law appeared first on CasinoBeats.