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In addition, obtaining a state license would have cost Kalshi $15 million over the first four years, then $1 million per year. Kalshi – worth $22 billion – considers the license to be “expensive and burdensome,” the complaint said.
Kalshi wants only CFTC oversight
In particular, Kalshi sued Illinois to not require the platform to obtain a license to bet on high-value sports, certify that bettors are in the state, and pay additional taxes.
The company says states like Illinois are jumping the gun in trying to regulate the prediction markets as if they were game players. Instead, the federal agency, the Commodity Futures Trading Commission (CFTC), has sole authority to regulate Kalshi, the platform argued.
In addition, Mr. Kalshi said that complying with Illinois law and preventing residents there from violating the CFTC’s requirements to provide universal access to its platform.
Without court intervention, Mr. Kalshi will be forced to choose between violating state or federal law, the platform argued. It has asked the court to clarify that only the CFTC can regulate betting markets and to invoke the Illinois ban on Kalshi and traditional platforms such as FanDuel.
Without the law, Kalshi could face civil and criminal penalties, the platform said. According to Kalshi, complying with the Illinois law — and a number of state laws that may follow — would also require the platform to invest in affordable “technological” measures to limit access. And there is no guarantee that Illinois will issue a license, threatening risks that may not materialize, including financial and reputational losses, Kalshi argued.
What is sports betting according to Kalshi?
The most important battle that Kalshi and other betting markets have to win is the legal interpretation of sports betting.
Kalshi’s case comes after the CFTC the defendant Illinois in April. In that complaint, the CFTC said that what Illinois said was Kalshi’s sports betting was a legal “exchange” for “control agreements” known as “event agreements” that the CFTC allows, so that stakeholders can hide their risks when visiting uncertain but financial events.
