Kalshi to Ignore Cease and Desist Letters

All those cease and desist letters seem to be losing their bite.

Michigan, New Jersey and Florida have been among the most aggressive when it comes to sending these letters demanding that "unlicensed" sportsbooks and casinos stop taking bets in their respective states.  We are even hearing that offshore sportsbook Bovada, one of the first to be hit with cease and desist letters, is starting to move back into some of the markets they initially pulled out of.  Gambling911.com cannot independently confirm whether this is indeed the case.

The bullseye at the moment appears to be sweepstakes casinos like Chumba and McLuck.

And then there is Kalshi, one of a handful of prediction markets that's taking the gambling industry by storm.

It was okay when Kalshi offered bets on box office opening weekends and the price of crypto, but now that they've gotten into the sports betting arena, state regulators are beginning to take notice.

And why wouldn't they?  A look at Monday night's NCAA Men's Basketball Championship game between the Houston Cougars and Florida Gators reveals betting volume at more than $387 million.

Kalshi’s founder Tarek Mansour stated during an interview with TechCrunch on Friday he isn’t “necessarily very concerned” about cease-and-desist orders he received from five U.S. states.

“We are literally like a financial exchange, but the underlying trading is events,” Mansour said. “The CFTC is our regulator. If the CFTC tells us to stop, we will absolutely stop. If they don’t, then we won’t.”

Among the states going after Kalshi: Nevada, Illinois, Ohio, New Jersey, and even Montana, which only offers retail sports betting.

Not on that list is Michigan, which is seen as the most aggressive when it comes to sending cease and desist letters to primarily sweepstakes casinos and offshore gambling sites, both casinos and sportsbooks.

Kalshi has filed lawsuits against Nevada and New Jersey.

“I can’t speak to why they are taking this action, but prediction markets have proven their use, so it is a shame that these authorities are still trying to censor them,” Mansour said in a social media post on X. “We are left with no choice: sue.” 

The chief analyst for regulatory technology provider Vixio called Kalshi’s prediction market legality pursuit “perhaps the most significant legal issue of sports betting in nearly a decade.”

“Vixio has been tracking the regulation of the U.S. sports betting market since the landmark Supreme Court ruling of 2018 that called time on the federal prohibition, and Kalshi’s litigation marks a key turning point for the future of the market,” Vixio’s James Kilsby said in a statement.

“At stake is whether regulation of sports wagering will continue to be a matter for state and tribal governments to determine, or whether there will be a new paradigm of federal regulation that enables licensed exchanges to operate across all 50 states under a framework that does not mesh with state laws on traditional forms of gaming.”