Kalshi Sues Missouri Over Its Prediction Market Crackdown

Kalshi has sued the Missouri Gaming Commission and several state officials. According to the company, regulation of prediction markets falls solely under the authority of the CFTC, a federal body, and states have no say in the matter. The lawsuit is the latest step in the legal fight between prediction market operators and states. Last week, Kalshi also sued Louisiana to stop the state from enforcing its gambling laws.

The lawsuit follows cease-and-desist letters that Missouri Attorney General Catherine Hanaway sent to Kalshi and other prediction market platforms last month. The letters claim these platforms offer illegal sports betting. The company argues that the Commodity Exchange Act gives the CFTC exclusive authority and that federal law prevails under the Supremacy Clause of the Constitution. According to the letter, Kalshi must either stop operating in Missouri or obtain a license from the Gaming Commission, pay taxes and fees, and block users under 21. The deadline was set for October 16.

The problem is not limited to Missouri. This week, the state of Utah also filed 14 criminal cases against Kalshi and its co-founders. The state considers allowing bets on sporting events to be a violation of its gambling laws.

A spokesperson for the Missouri Attorney General's office said online prediction markets and sports betting at traditional casinos should be subject to the same rules. According to the spokesperson, both models are sports betting and must comply with licensing and tax rules approved by voters. The office said it trusts that federal courts will not block Hanaway from enforcing the law.

Meanwhile, Missouri casino revenue has risen on an annual basis. Despite this increase, table game revenue has declined in recent months.