WASHINGTON — A financial reform group has asked a federal appeals court to side with New York in its effort to stop the prediction-market company Kalshi from offering sports-related contracts in the state without complying with state gambling law.
Better Markets, a nonprofit that describes itself as non-partisan and independent and was founded after the 2008 financial crisis, said Nov. 9 that it filed a friend-of-the-court brief in KalshiEX v. Williams, a case before the 2nd U.S. Circuit Court of Appeals.
The brief urges the court to reject Kalshi’s appeal on the merits and affirm New York’s right to protect its residents from what the group called lawless sports betting.
“Kalshi’s sports bets are what they look like: gambling, pure and simple,” said Dominick Freda, the group’s legal director. “And it’s time for this illegal gambling to be put to an end.”
Freda also took aim at the Commodity Futures Trading Commission, the federal agency that regulates the derivatives markets where Kalshi’s contracts trade. He described the agency as Kalshi’s “regulatory cheerleader” and said, “The law is clear, the CFTC’s position promoting lawless prediction markets is baseless.” According to the group, allowing federal law to override state gambling rules would expose millions of Americans to the harms of sports betting.
Better Markets pointed to recent rulings by the 9th and 6th U.S. circuit courts of appeals, which it said told Kalshi to follow state gambling laws as other online sportsbooks must. The group said none of the 29 judges on the 9th Circuit voted in favor of Kalshi’s request that the court reconsider its decision.
The group also noted that the 2nd Circuit has already ruled, on a preliminary basis, that Kalshi may not keep operating its sports contracts in New York while the appeal is pending. Better Markets called that a promising sign of where the court is headed.
The appeal remains pending, and the court has not ruled on the merits.
Kalshi lets users trade contracts tied to the outcomes of events, including sporting events, and has argued in court that its federally regulated markets are not subject to state gambling laws. The fight has played out in courts across the country as states, including New York, have moved to bring the contracts under their gambling rules.
This report is based on information from Better Markets.
Source: Better Markets
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