In an interview on Monday, Mansour stated, “we’re not necessarily very concerned” about state regulators’ complaints of illegal sports betting. Kalshi has now received five cease-and-desist letters over their sports prediction markets. Maryland was the latest state to send the order, following Illinois, Ohio, Nevada, and New Jersey last week.
Nevada and New Jersey were the first states to send the letter a week ago, and Kalshi filed a lawsuit in response to stop the order. On Tuesday, a court will decide whether to grant a restraining order and preliminary injunction that would allow operations to continue in Nevada.
If the court sides against Kalshi, then they may be forced to withdraw from a state and end their claim to offer markets in all 50 states.
Prediction markets not a state concern
In the interview with Tech Crunch, Mansour said, “The core of why we’re not necessarily very concerned is we are regulated at the federal level.” The Commodity Futures and Trading Commission (CFTC) oversees the company’s actions and Mansour said they would only end their sports prediction markets if the CFTC intervened.
“If the CFTC tells us to stop, we will absolutely stop,” Mansour said. “And if they don’t, then we won’t.”
However, last year the CFTC told Kalshi to stop in their election betting, but the company sued. At the time, Kalshi stated that banning election markets was “an unlawful agency power grab that corrupts and dramatically expands” their mandate.
It is, therefore, questionable whether they would actually withdraw from any sports prediction markets even if the CFTC intervened. Rather, it would take several courts to issue strict enforcement before conceding defeat. Mansour has always been bullish about the legality of Kalshi’s markets and looks unlikely to back down.
“Prediction markets are a critical innovation of the 21st century, and like all innovations, they are initially misunderstood. We are proud to be the company that has pioneered this technology and stand ready to defend it once again in a court of law,” he said in response to the cease-and-desist letters.
A key moment for the industry
The decision in Nevada on Tuesday could have far-reaching implications for prediction and crypto betting markets. Crypto.com and Robinhood have been issued similar cease-and-desist letters over their operations and will likely follow Kalshi’s actions after the verdict.
“The hearing tomorrow in Las Vegas tees up the key issue of whether Congress intended for CFTC regulation at the federal level to preempt sports-related gaming regulation by the states,” said Ryan Rodenberg, a Florida State University professor who is an expert in the legal history of sports betting in the US.
“At the conclusion of the hearing, the judge will either immediately issue a ruling directly from the bench or release a ruling after deliberating for a short time in chambers.”
Watch this space for more news on the outcome.
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