Kalshi And Prediction Markets Question Continues To Roil U.S. iGaming Legislators

This week the Michigan Gaming Control Board (MGCB) fired a prediction markets warning shot across the bows of America. And guess what? Kalshi, the most prominent of the iGaming soon-comers, isn’t taking it lying down.

The Michigan regulator has come out swinging big and bold and made it clear it’s not cutting any slack for contentious prediction markets, whatever the zeitgeist and powerful interests at play.

In a memo released last week, MGCB Executive Director Henry Williams basically told licence-holders: “Don’t even think about it!”

Michigan is now the third state to step up, warning existing licensees that dabbling in prediction markets could result in the loss of their permits.

Abuse of Power

Wrote Williams: “[We are] aware that licensees may be considering opportunities to operate, offer, or facilitate access to prediction markets, where individuals can buy, sell, and trade event contracts based on a future event, occurrence, or value.

“These prediction markets would offer sporting event contracts [and] would not operate in accordance with state gaming laws or under state-issued licences. 

“Any involvement–directly or via an affiliate, key person, or related entity–will have implications for your Michigan licence,” he warned, adding, ominously, that any dabbling in prediction market activity could have jurisdictional impact beyond his state.  

Arizona and Ohio regulators have also sent out similar warnings to their iGaming licensees.

Legal Offensive

But Kalshi has countered by ramping up their legal offensive, filing a case against the Ohio Casino Control Commission (OCCC) and the Ohio Attorney General in the U.S. District Court for the Southern District of Ohio on October 8.

Top iGaming lawyer Daniel Wallach has described it as: “A new front in Kalshi’s legal war against the states – weaponising gaming regulators’ warnings to keep its partners away.”

And Kalshi is seeking both a preliminary and permanent injunction to prevent the two state agencies from enforcing state law.

Kalshi Co-founders Tarek Mansour and Luana Lopes Lara argue that the OCCC is “misusing its power”, and that acting on its threats would cause massive financial and reputational disruption, jeopardising existing and potential partnerships.

As Kalshi puts it: The upshot is if “any Ohio licensee partners with Kalshi–anywhere in the U.S.–they risk losing their licence”.

Kalshi’s Case

The company says the OCCC is essentially treating them the same as an illegal gambling site, which–because they’re federally- and not state-regulated–they assert they most definitely are not. 

These actions, claim Kalshi, threaten: “Immediate and irreparable harm, not just to Kalshi but to its customers and commercial counterparts.”

When viewed through the lens of fair business and competition, perhaps they have a point.” 

The case against Kalshi and the other prediction market sites, such as Robinhood and Polymarket, many of whom enjoy close ties with the Trump Organisation and acolytes of the U.S. president, looks set to run and run.

Watch this space!