Prediction Market Kalshi Sues Iowa Attorney General and Racing and Gaming Commission

Gate News reports that on March 12, Kalshi, a prediction market platform, filed a lawsuit in Iowa federal court against Iowa Attorney General Brenna Bird and the Iowa Horse Racing and Gaming Commission, claiming there is a “significant risk” of enforcement actions being taken to block its event contracts. Kalshi stated that its representatives previously met with Bird, initially believing it was to discuss a tax bill under review by the state legislature, but during the meeting, a group of lawyers—including the state deputy attorney general—questioned whether its federally regulated products violated state law with a series of pointed questions. Kalshi claimed that Bird told its representatives that the Attorney General’s office had been “paying close attention” to the company “for a long time.” Afterward, Kalshi contacted the Attorney General’s office seeking assurance that no enforcement actions would be taken, but received a written response stating that they “cannot make any guarantees regarding potential future enforcement actions.” In the lawsuit, Kalshi argues that federal law takes precedence over state law, as its designated contract market is under the exclusive jurisdiction of the Commodity Futures Trading Commission (CFTC). Previously, Kalshi has engaged in legal disputes with sports betting regulators in several states over the legality of sports event contracts, with courts issuing mixed rulings: courts in New Jersey and Tennessee have supported Kalshi, temporarily blocking state regulators from taking action; the federal court in Ohio dismissed Kalshi’s request earlier this week; and the federal court in Massachusetts also blocked Kalshi from offering event contracts in that state earlier this year.