Kalshi Seeks Court Order to Halt Montana Gambling Directive

(AsiaGameHub) –   Kalshi has launched a new battle in the ongoing fight over prediction markets. In Montana, the firm is seeking a federal judge’s order to prevent state authorities from classifying its event contracts as illegal gambling as the broader regulatory control dispute unfolds.

Good to Know

• Montana issued a cease-and-desist order after determining there was probable cause that Kalshi’s operations meet the state’s definition of gambling.
• Kalshi maintains that the CFTC alone is empowered to regulate its exchange pursuant to the Commodity Exchange Act.
• Similar disputes are already underway in other states, such as Tennessee, where Kalshi recently secured temporary federal protection against state action.

Federal Regulatory Authority Is At The Core

Montana claims Kalshi’s contracts constitute illegal gambling. Kalshi argues Montana has no jurisdiction in this matter whatsoever. That sums up the entire case in a nutshell.

Following a state probe, the Montana Gambling Control Division issued a cease-and-desist order, stating that participants are risking value on outcomes linked to chance or a gambling operation. Kalshi responded by filing a federal lawsuit against Attorney General Austin Knudsen and other state officials, requesting declaratory and injunctive relief to halt enforcement. The company contends its market is governed by federal derivatives laws and overseen by the national CFTC, rather than state gambling regulations.

Kalshi further notes that its contracts are transactions between users, not wagers against the platform itself. Traders purchase “yes” or “no” positions on real-world events and can exit their positions before settlement as prices fluctuate. In the legal filing, the company’s attorneys stated:

“Because traders do not take a position against the exchange itself, traders’ ability to hedge risk requires counterparties willing to assume risk in the hope of seeing a return.”

The filing indicates Montana initially agreed to pause its actions while related litigation in Nevada proceeded, but the state later sent an additional warning letter and escalated the threat of legal proceedings. Kalshi claims this increased the risk and compelled the company to file the new lawsuit.

The Montana dispute is part of a broader trend. Reuters has reported that the Trump administration, via the CFTC, has already filed lawsuits against Arizona, Connecticut, and Illinois over similar state attempts to regulate prediction markets. Additionally, Reuters noted that a federal judge in Tennessee temporarily blocked state action against Kalshi earlier this year. Thus, Montana is not an isolated incident; it is part of a larger conflict between state and federal authorities over sports event contracts and prediction markets.