Iowa Federal Judge Deals Another Blow to Kalshi as State Allowed to Apply Gaming Laws

Kalshi has been battling on all fronts, with gaming regulators insisting the platform has been offering unauthorized markets on sports event outcomes. The platform – and regulators – have been duking it out in courts, with a federal judge in Iowa now dealing the prediction market behemoth another setback. Iowa’s Federal Judge Won’t Block the State from Applying Gaming Laws According to US District Judge Stephen Locher, Kalshi is indeed operating under gaming laws, or rather – in breach of them. Judge Locher did not go so far as to deliver a definitive verdict in the matter. Still, he denied a preliminary injunction request by Kalshi to block Iowa from applying the state’s gambling laws to the platform’s local business. The request was pre-filed in March, ahead of moves against its operations, following a meeting with Iowa AG Brenna Bird’s staff. In his decision, Judge Locher stated: “If Congress intended to pre-empt state gambling laws when it enacted and amended the Commodity Exchange Act, it should have been clear about that pre-emption. The text of the Commodity Exchange Act does not meet the mark.” The judge did argue that the CFTC’s regulatory mandate rested only with swaps or contracts of sale of a commodity for future delivery, which is not the same, in his opinion, as event contracts on sports. The judge has focused specifically on analyzing the sports event aspect of the argument, and argued that while he saw merit in some of the arguments put forward by Kalshi, it would be “hard to conclude” that Congress meant to apply the existing framework to sporting events. Choose Your Words Wisely The judge also leaned on a point GamblingNews has previously reported on: Kalshi’s own marketing has, at times, described its products using language like “betting,” a choice of words that has come back to haunt the company as legal arguments over its status have intensified. Locher specifically cited an old Kalshi advertisement branding itself as ‘the first app for legal sports betting in all 50 states,’ using the company’s own words against it. Of course, just because the federal court has decided to not block Iowa from applying gambling laws to Kalshi locally, this does not mean that a final verdict would also land in the state’s favor. Kalshi has learned how to play hardball, not least due to the litany of legal action it has been battling.