Kalshi Cites Lawmaker Comments in Lawsuit Filing
Prediction market operators normally wait for a cease-and-desist letter before taking any legal action against a state. However, Kalshi felt it had seen enough from Utah’s top lawmaker to make an exception.
In its filing, the industry-leading operator cited Brown's op-ed. It also highlighted Cox’s public rebuttal of the CFTC head and promise of legal action.
New Bill Could Threaten Prediction Markets
The comments from Cox and Brown aren’t the only reason for Kalshi’s action.
The Utah House is currently reviewing HB 243, which would ban all forms of prop betting. The bill’s vague wording could allow it to be applied to prediction markets, forcing operators to drop those profitable markets.
During discussions over the bill, House lawmakers have argued that prediction markets are a poorly disguised form of sports betting. While their focus wasn’t on the prediction industry, it was clearly considered when the bill was drafted. If it passes, the state will have another avenue to attack Kalshi and other prediction operations.
Utah Provides a Unique Battleground
Kalshi and the prediction industry have a right to be nervous about the situation unfolding in Utah. The market presents a unique challenge that could significantly damage the industry’s future for two primary reasons.
The first is the state’s full gambling ban. The lack of any legal market means prediction operators aren’t financially hurting the state. As a result, Utah’s objections are unquestionably being made on moral grounds, taking away a key attack strategy from Kalshi.
The other challenge is the state’s conservative leadership. While its top lawmakers are Republicans, they are not afraid to stand against the White House. That means they are unlikely to bend to pressure, and could force the President to back off his support for the industry ahead of a crucial midterm election.
