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The prediction market Kalshi has sued Arizona state regulators in federal court, seeking to head off enforcement action over sports-event contracts in the state courts.
"Bold move considering CA9 intra-circuit precedent favoring states, but preferable to an all-but-certain state court TRO," writes gambling attorney Daniel Wallach.
Excerpts from the complaint include the following:
"There is a substantial risk that the Attorney General of Arizona will bring an enforcement action against Kalshi on behalf of the Arizona Department of Gaming with the intent to prevent Kalshi from offering event contracts for trading on its federally regulated exchange."
"Kalshi believes the State of Arizona will imminently bring an enforcement action against Kalshi with the intent to prevent Kalshi from offering event contracts for trading on its federally regulated exchange."
"When Kalshi’s counsel attempted to contact the Arizona AG to obtain written assurances of non-enforcement, Kalshi was met with silence, even though the Arizona AG had previously been willing to communicate with counsel and had previously assured Kalshi that would not pursue an enforcement action without providing prior notice."
Arizona’s main gaming regulator, the Arizona Department of Gaming (ADG), has said prediction markets pose a threat to the state’s regulated betting system.
They claim such platforms platforms represent “unlicensed event wagering” targeting Arizona residents.
Kalshi CEO Tarek Mansour insists his site, which is regulated by the Commodity Futures Trading Commission (CFTC), does not offer gambling. Instead, the markets are "event contracts".
“I just don't really know what this has to do with gambling… If we are gambling, then you’re basically calling the entire financial market gambling.”
- Chris Costigan, Gambling911.com Publisher
