37 U.S. states stand up to Kalshi and assert his authority over sports betting
A coalition of attorneys general is demanding that predictive markets cannot circumvent state gambling laws under federal regulation of financial derivatives. The judicial offensive also affects Polymarket.
The regulatory battle against predictive markets adds a new chapter in the United States. 37 states, along with the District of Columbia and the Northern Mariana Islands, have filed a brief with the Second Circuit Court of Appeals to support New York in its legal confrontation with Kalshi.
The document, filed on Nov. 6, argues that federal financial derivatives legislation should not prevent states from enforcing their own rules on sports betting and consumer protection.
The litigation began after the New York Gaming Commission ordered Kalshi to cease certain activities. The company went to court claiming that its contracts are subject to federal oversight by the Commodity Futures Trading Commission (CFTC).
A federal court initially rejected Kalshi's request to block enforcement of state regulations, a decision that the platform has appealed.
The judicial pressure also extends to Wisconsin, where a second coalition of 38 states has filed another brief in defense of the equivalent autonomous powers in the United States.
This procedure also affects Polymarket, Coinbase, Robinhood and Crypto.com, companies involved in the conflict over the commercialization of contracts linked to sporting events.
California Attorney General Rob Bonta has argued that predictive markets cannot use federal law to avoid obligations imposed on traditional betting operators.
The states' position raises a fundamental question for the future of the sector: whether a contract on the outcome of a match should be considered a financial instrument or a sports bet subject to a gambling license.
