Kalshi and U.S. prediction markets face widening regulatory litigation across states

Traders Union
All News
Crypto
Kalshi, prediction markets litigation

Highlights

Kalshi faces mounting multi-state litigation as Minnesota debates a ban, Nevada's Supreme Court upholds customer blocking, and Michigan issues a two-week restraining order.
Ohio regulators penalized Kalshi for alleged unlicensed sports betting, prompting the company to sue and challenge state authority over its operations.
The CFTC asserts exclusive federal jurisdiction over prediction markets, with New Jersey's ongoing Supreme Court dispute and states like North Carolina nearing a 6% tax on sector revenue.

Multi-state court battles intensify

As reported by CoinDesk, Kalshi and other prediction market operators are pressing in court this week that state gaming regulators do not have authority over their offerings, even as setbacks mount in several jurisdictions.

In Minnesota, lawyers for Kalshi and the state are making oral arguments over the company's effort to stop a ban on prediction markets as illegal activity. In Nevada, the state Supreme Court recently denied Kalshi's emergency bid to halt a requirement that it block customers in the state from much of its platform, saying the justices were not persuaded by the motion.

Ohio has opened another front after Kalshi sued the state's gaming regulator on Monday, seeking to halt a penalty tied to accusations that it operated an unlicensed sports-betting business. In Michigan, a local court granted regulators a temporary two-week restraining order barring Kalshi from offering, advertising or facilitating sports betting in the state.

Michigan Gaming Control Board Executive Director Henry Williams says in a Tuesday statement that Kalshi is targeting vulnerable residents with sports betting presented as investing, and that harm will worsen without intervention. Kalshi spokesperson Jacki McGavick says the company will keep defending Americans' access to what it describes as a fairer and more transparent market wherever that access is challenged.

Federal oversight and tax debates gain weight

The Commodity Futures Trading Commission is taking an increasingly assertive position in support of the sector, arguing under Chairman Mike Selig that prediction market contracts fall under the agency's exclusive jurisdiction as the U.S. derivatives regulator. That stance is central to the industry's survival because a definitive court ruling could determine whether users are gambling or buying derivatives products.

New Jersey remains a major test case in that jurisdiction fight. The state is moving its dispute toward the U.S. Supreme Court after a federal court pause favored Kalshi's argument that the CFTC likely has authority, and Justice Samuel Alito granted an extension until Aug. 4, 2026 in the appeal process, according to the Supreme Court docket.

At the same time, states are also examining the revenue potential from the sector's rapid growth. North Carolina's legislature is close to final approval of a budget bill that would impose a 6% tax on prediction market revenue while raising sportsbook gaming taxes to a higher level, and New Jersey is among states exploring separate tax regimes as regulators and lawmakers try to define how prediction markets fit within broader wagering rules.

The U.S. Supreme Court ruling on Donald Trump’s bid to remove Federal Reserve Governor Lisa Cook underscored the legal limits of presidential authority and reinforced the Fed’s institutional independence. Our publication previously noted that while the decision protects monetary-policy credibility and investor confidence, its narrow scope leaves room for future legal and political challenges to the Fed’s autonomy.

This material may contain third-party opinions, none of the data and information on this webpage constitutes investment advice according to our Disclaimer. While we adhere to strict Editorial Integrity, this post may contain references to products from our partners.