Prediction market platform Kalshi has filed a lawsuit against Iowa state regulators, including Attorney General Brenna Bird. The company claims it took preemptive legal action due to a substantial risk of enforcement against its sports event contracts. This lawsuit continues a broader legal conflict between Kalshi and multiple state gambling authorities over the regulatory classification of its offerings.
Prediction market Kalshi has sued regulators in the US state of Iowa. The company claims it acted due to a risk of impending enforcement action over its sports event contracts.
Kalshi sued Iowa Attorney General Brenna Bird and the Iowa Racing and Gaming Commission in federal court. It argued there “is a substantial risk” Bird would bring an enforcement action to block the company’s contracts.
In its complaint, Kalshi said a representative met with Bird to discuss a tax bill. Instead, he was greeted by a panel of attorneys, including Iowa’s Solicitor General, who proceeded to ask a series of pointed questions about state law compliance.
The company later contacted the Attorney General’s office seeking assurances against enforcement. The official said in writing that ‘we will not give any assurances about potential future enforcement,’ according to the complaint.
Kalshi argues federal law preempts Iowa from subjecting it to state gambling laws. It states that as a designated contract market, it falls under the exclusive jurisdiction of the Commodity Futures Trading Commission.
This lawsuit is Kalshi’s latest legal action against a state regulator. Many state officials allege its sports outcome contracts constitute unlicensed gambling.
Federal courts have delivered mixed rulings on similar cases. An Ohio federal court recently denied Kalshi’s request to block state action there.
Courts in Massachusetts and Nevada have also ruled against the company recently. In contrast, federal courts in New Jersey and Tennessee have temporarily blocked state regulators from taking action.
