Maybe I'll Sue You... For Punitive Damages
A look at the various lawsuits Kalshi is involved in: States suing Kalshi; Kalshi suing states; Tribes suing Kalshi; and the CFTC getting involved on Kalshi's behalf.
The Bulletin Board
THE LEDE: An update on prediction market legal cases.
ROUNDUP: A look at the stories you may have missed.
AROUND the WATERCOOLER: Kalshi’s hires and FanDuel’s cuts.
STRAY THOUGHTS: Don’t be a gardener in a war.
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The Lede: Updating Kalshi’s Legal Entanglements
*Super bonus points for knowing the reference in today’s title.
It’s been about six weeks since I updated the legal battles Kalshi is enmeshed in, so here goes. If you’re looking for links, or detailed analysis I recommend searching Daniel Wallach’s X account or heading over to Mick Bransfield’s website.
States Sued By Kalshi
🚨New Jersey (3rd Circuit)
Kalshi sued the Division of Gaming Enforcement after a cease-and-desist, securing a preliminary injunction in 2025. The 3rd Circuit upheld it 2-1 on April 6, 2026, in the first federal appellate ruling, holding that Kalshi’s sports event contracts are CFTC-regulated “swaps” subject to exclusive federal jurisdiction and preempting state gambling laws, and thereby allowing continued operations in New Jersey with no restrictions imposed.
🚨Nevada (9th Circuit)
Kalshi filed a preemptive federal suit after the state sent a cease-and-desist letter. Kalshi initially won a preliminary injunction in April 2025, but the same judge dissolved it in December 2025, ruling sports-related contracts resemble illegal betting. Nevada extended a preliminary injunction in April 2026 barring Kalshi from offering sports, election, or entertainment event contracts without a gaming license. A similar ruling was issued against Polymarket in June. Kalshi appealed to the 9th Circuit, where arguments were heard in April 2026. A decision could create a circuit split with the 3rd Circuit.
Montana (9th Circuit)
Kalshi sued Montana Attorney General Austin Knudsen and gambling regulators in federal court in April 2026 after the state issued a second cease-and-desist letter. According to the filing by Kalshi, Montana broke a 2025 non-enforcement agreement tied to the Nevada case.
Maryland (4th Circuit)
Kalshi sued Maryland to block enforcement of a cease-and-desist letter, but suffered an early district-court loss in August 2025 when the judge denied a preliminary injunction, finding no preemption. The case is on appeal.
Ohio (6th Circuit)
As it did elsewhere, Kalshi filed a preemptive federal suit after a cease-and-desist. The district court denied the preliminary injunction, ruling sports event contracts are not “swaps” under the CEA.
Connecticut (2nd Circuit)
Kalshi sued Connecticut in federal court in December 2025 to challenge a cease-and-desist from the state’s Department of Consumer Protection, arguing CFTC preemption bars state regulation of its event contracts.
Tennessee (6th Circuit)
Kalshi challenged a cease-and-desist with a federal suit and won a preliminary injunction in February 2026. The court found the contracts are likely CEA “swaps” and that federal law preempts state enforcement; the state has not yet appealed.
Minnesota (8th Circuit)
Kalshi sued Minnesota in federal court in May 2026, to block a new law (signed mid-May, effective Aug. 1, 2026) that would make operating or advertising prediction markets a felony.
Iowa (8th Circuit)
Kalshi filed a preemptive federal suit against the state arguing CFTC exclusive jurisdiction over its event contracts. The case is at the trial stage.
Utah (10th Circuit)
Kalshi filed a preemptive federal suit against Utah, once again arguing CFTC exclusive jurisdiction over its event contracts. The case remains at the trial stage.
New York (2nd Circuit)
Kalshi is actively litigating against enforcement actions in New York, arguing CFTC exclusive jurisdiction.
States Sued By the CFTC
Arizona
Filed jointly with Kalshi’s parallel action after the state issued cease-and-desists and brought the first-ever criminal misdemeanor charges against Kalshi. As noted above, a federal judge issued a permanent injunction in early May 2026 on preemption grounds, halting the prosecution.
Connecticut
The CFTC filed suit in response to the state’s cease-and-desist letters targeting sports and other event contracts.
Illinois
As it did in Connecticut, the CFTC sued Illinois, challenging the state’s enforcement efforts against prediction markets.
New York
The CFTC sued New York shortly after New York filed enforcement actions and a lawsuit against prediction market operators.
Wisconsin
The CFTC filed a lawsuit in response to Wisconsin AG Josh Kaul’s April 2026 civil suit against Kalshi and other prediction market platforms.
Minnesota
The CFTC filed suit one day after Gov. Tim Walz signed a first-in-the-nation law criminalizing the operation or promotion of prediction markets as a felony.
States That Have Sued Kalshi
🚨Massachusetts
Massachusetts AG Andrea Joy Campbell sued Kalshi in Massachusetts state court in September 2025 alleging unlicensed sports wagering. A Suffolk County Superior Court judge granted a preliminary injunction in January 2026 (the first and only state-court injunction to date) barring Kalshi from offering sports-related event contracts to in-state users without a license. Kalshi must comply via geo-fencing and has indicated plans to appeal, but the order forces it to restrict or wind down those offerings in Massachusetts.
🚨Arizona (9th Circuit)
Arizona filed the first-ever criminal charges against Kalshi in March 2026, listing 20 misdemeanors for unlicensed wagering/election betting. The CFTC and Kalshi sued, and a federal judge issued a permanent injunction in May 2026 on preemption/constitutional grounds. This halted prosecution, and avoided an operational shutdown.
Michigan
Michigan AG Dana Nessel sued Kalshi seeking an injunction and abatement for alleged illegal gambling. The case is proceeding at the trial level with no major rulings.
Washington
Washington State AG Nick Brown sued Kalshi in March 2026 for violating the Gambling Act and Consumer Protection Act by offering sports, election, and event betting.
New Mexico
As reported yesterday, the New Mexico AG sued Kalshi for unlicensed gaming violations that allegedly threaten tribal operations.
Wisconsin
Wisconsin AG Josh Kaul sued Kalshi (and other prediction markets) in April 2026, alleging sports-related event contracts are illegal sports betting.
Tribal Lawsuits
California Tribes (9th Circuit)
Three tribes (Blue Lake Rancheria, Chicken Ranch Rancheria, Picayune Rancheria) sued Kalshi, alleging violations of the Indian Gaming Regulatory Act and tribal compacts. A federal judge denied their preliminary injunction in November 2025. A 9th Circuit appeal is active and the tribes recently lost a procedural bid to consolidate it with the Nevada case.
Wisconsin-Ho-Chunk Nation (7th Circuit)
The Ho-Chunk Nation sued Kalshi in August 2025, claiming illegal sports betting on tribal lands under IGRA. A federal judge allowed core claims to proceed in May 2026 while denying a preliminary injunction; trial is set for 2027.
New Mexico Tribes (10th Circuit)
Four tribes (Mescalero Apache, Pojoaque, Sandia, Isleta) sued Kalshi in May 2026 for operating unauthorized sports betting on tribal lands in violation of compacts and federal law.
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Roundup: So Much News; So Little Newsletter Space
Kalshi adds new market integrity policies [Press Release]: Kudos to Kalshi for continuing to raise the bar in the prediction market space (something I’ll discuss more in an upcoming newsletter: “Prediction markets need to be safe spaces to trade, and Kalshi is committed to leading the industry on market integrity. Today, we are announcing new market integrity measures based on the independent Surveillance Audit Committee’s first-ever report – effective immediately. The new measures include: Risk scoring: We have developed a specific risk score assigned to markets with heightened insider trading or manipulation risk. Employment Verification: For markets with certain scores, we will collect employment and put in measures to screen potential insiders. Enhanced whistleblower features: New features allow users to directly report abusive trading activity on every market, and a dedicated intake system for whistleblower reports.”
NCPG survey on prediction markets [Press Release]: “A new national survey conducted by The Harris Poll on behalf of the National Council on Problem Gambling (NCPG) finds broad public support for consumer protections on prediction market platforms, with a majority of Americans viewing the platforms as carrying risks similar to gambling, and believe corresponding safeguards should be applied.” Per the findings, “Nearly half of Americans (45%) say prediction markets are comparable to gambling, while 27% say they are most similar to investing. 84% of Americans believe prediction market platforms should be treated similarly to gambling when it comes to consumer protections. 82% of Americans say platforms where people can risk money on future outcomes should be required to offer responsible gaming or consumer protection tools such as deposit limits, cooling-off periods, and access to help resources.” STTP Thoughts: I’ll have more to say about several aspects of this in an upcoming newsletter.
FanDuel Predicts expands offerings with Crypto.com partnership [Press Release]: FanDuel Predicts has announced a new partnership with Crypto.com’s CFTC-regulated exchange and clearinghouse, OG Prediction Markets. Per the press release, “The addition of new product sets listed at Crypto.com’s OG Prediction Markets marks an expansion for FanDuel Predicts customers who will now have access to a wider variety of markets across sports and entertainment categories complementing the existing offer of contracts available through CME Group. This addition will also deepen customers’ ability to trade combinations of event contracts.”
Gambling is Not Investing’s Mick Mulvaney to speak at NCLGS [Press Release]: “The National Council of Legislators from Gaming States (NCLGS) today announced that Mick Mulvaney, Executive Director of Gambling is Not Investing and former White House Chief of Staff, will participate in a featured discussion at the 2026 NCLGS Summer Meeting examining the rapidly evolving regulatory landscape surrounding sports betting on prediction market platforms… The session will explore key questions surrounding consumer protections, state regulatory authority, market oversight, and the intersection of gaming and financial regulation.” The NCLGS Summer Meeting will be held July 8-11 at the Hard Rock Hotel San Diego, you can register here.
CFTC Chair explains why prediction market rule proposal is moving fast [Video Below]: CFTC Chairman Michael Selig told Empire Pod that the rule proposal recently reviewed by the White House will only address “one aspect of prediction markets. It won’t be comprehensive”
Bloomberg Odd Lots Podcast asks why Susquehanna is building a prediction market business [Video Below]:
Around the Watercooler
Social media conversations, rumors, and gossip.
A few updates on the job front, as Kalshi made two political hires last week:
And FanDuel reportedly trimmed its staff:
The full story on the FanDuel layoffs from Front Office Sports can be found here.
Stray Thoughts
A 2017 Harvard Business Review (paywall) interview with Jerry Seinfeld popped up on my timeline, and it really spoke to me.
HBR Senior Editor Daniel McGinn: “You and Larry David wrote Seinfeld together, without a traditional writers’ room, and burnout was one reason you stopped. Was there a more sustainable way to do it? Could McKinsey or someone have helped you find a better model?
Jerry Seinfeld: “Who’s McKinsey?”
McGinn: “It’s a consulting firm.”
Seinfeld: “Are they funny?”
McGinn: “No.”
Seinfeld: “Then I don’t need them. If you’re efficient, you’re doing it the wrong way. The right way is the hard way.”
I love this exchange because it speaks to something I see in both the worlds I occupy: martial arts and gambling.
The moment you start obsessing over efficiency (think Office Space’s “Bobs” asking everyone to explain their jobs), you’ve already lost the plot. Efficiency is necessary, but it is also the silent killer of creativity and passion. There is a trade-off, and most people skew too far in one direction or the other.
Think of it this way: As a company, would you rather have a few extra people on the team so everyone has breathing room to think, experiment, and pivot, or would you rather cut every redundancy until each person is doing the work of 1.5 people and has zero bandwidth left for anything except completing tasks?
The copy-paste, consultant-driven world always chooses the second option. It delivers quick, clean numbers. It also pins the business down and slowly drains the life out of everything it touches.
In the martial arts world I see schools turning to consultants with cookie-cutter training programs — useless and unnecessary certifications as a this-or-that specialist. They deliver short-term growth (sometimes at the expense of long-term health) and the school buys in hook, line, and sinker, never realizing it’s on the road to “efficiency.”
In the gambling world it’s the focus on quarterly results that drive “efficiencies.” Whether it’s the numerous stories about layoffs, or the, ‘What’s the quickest, least painful path to getting my product in front of as many people as possible’ mindset, everyone seems to be looking for shortcuts.
The overarching problem is efficiency doesn’t plan for the ‘what ifs,’ it only looks at the bottom line. Which is why I keep coming back to the old proverb: I’d rather be a warrior in a garden than a gardener in a war.
The hard way keeps you sharp, alive, and dangerous when it counts. The efficient way leaves you soft exactly when it matters most.
And here’s the part most people miss: the hard way isn’t just more effective. It’s the only one that’s actually fun and fulfilling.
As I wrote in November 2024 on gambling affiliates:
“The first areas trimmed back are the ones that aren’t producing visible results. That’s where these companies go entirely sideways.
“They cut the player who is the glue in the locker room in favor of someone who runs up their stat sheet during garbage time. Every championship team has a player(s) who does all the intangible things that don’t show up on the stat sheet (diving for the loose ball, hustling on special teams to down the ball at the 1-yard line). These players make their teammates better, but exactly how is unquantifiable. Not recognizing their value is a sin.
“I would also argue that it’s hard to stop once you start cutting. When employees start using the word “survived,” as in “I survived this round of layoffs,” you’ve dramatically altered the culture in your workplace. The best remaining talent will start putting out some feelers in search of greener pastures.
“Another area that often gets cut is the creative department, even if the company doesn’t officially have a creative department. These are the people who think outside the box and plan for the future, not the next quarter. Once again, their value is hard to quantify, so when the rubber meets the road, they get pink slips.
“As Small alluded, building and widening your reach when finances are tightening is difficult because companies lose sight of anything but the bottom line. Any long-term strategies are chucked aside to deal with the short-term issues, which are deep-rooted and often unfixable.
“Affiliates are doubling down on the strategies that got them into this mess, thinking they can cut their way out of it or ride it out until iCasino bails them out. I have my doubts.”