A Washington resident is seeking $580,000 from Kalshi after losing $308,000 on hundreds of sports bets. His lawsuit questions whether the platform's "event contracts" should fall under gambling regulations.
Here's what to know
According to Futurism, Scott Bright of Bellevue, Wash., is asking for more than his losses in a lawsuit filed in September. The filing cites Washington's ban on online gambling, stating that it has "prohibited Internet gambling since 2006."
Kalshi argued that federal commodities regulation governs its sports contracts when it asked for the lawsuit to be dismissed on Oct. 30, Ars Technica reported.
"The contracts which Plaintiff mischaracterizes as gambling are event contracts offered on the Platform subject to the CEA [Commodity Exchange Act], in conformance with the rules and regulations of the CFTC [Commodity Futures Trading Commission], the federal agency which has statutory authority to oversee the CEA," the motion stated.
More background
Federal courts remain divided over whether gambling regulations cover prediction markets. Platforms including Kalshi and Polymarket maintain that their event contracts comply with federal requirements.
Attorneys general in Washington, Utah, and New York have called for Kalshi to be shut down, calling it an "online casino."
While platforms may market themselves as entertainment, their rapid expansion has drawn scrutiny over potentially predatory design, aggressive advertising, financial risk, and easy access to real-time betting.
What's being done?
New York Attorney General Letitia James challenged Kalshi's reliance on federal event-contract rules in July, accusing the company of "running an illegal gambling operation."
Democratic lawmakers are adding congressional pressure to the state-level challenges facing prediction markets. Politico reported that they are "gearing up for an aggressive oversight regime" for the platforms.
Arkansas Attorney General Tim Griffin has separately argued that sports wagers on Kalshi fall under his state's prohibition on gambling through an unregulated platform.
"It doesn't take a genius to understand that wagering money on whether the Razorbacks win or lose is gambling," Griffin said. "And gambling on an unregulated platform is squarely prohibited by Arkansas law."
Where can I learn more?
The Kalshi lawsuit raises questions about how prediction markets are regulated and the risks of sports betting. These stories examine legal criticism, sports partnerships, a rejected sponsorship, and another bettor's lawsuit.
• Critics say Kalshi and Polymarket use prediction-market labels to dodge liability and taxes.
• The NBA's official ties to Kalshi and Polymarket drew backlash over gambling's grip on sports.
• Breaking Points rejected Kalshi's sponsorship pitch, saying it would "go bankrupt" before accepting the money.
• A Pennsylvania bettor sued FanDuel over allegations that its app bombarded him with late-night alerts after losses.
• A former regulator touted the social benefit of prediction markets while serving as a Polymarket adviser.
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