[NEWS]New Mexico filed a lawsuit against Kalshi for illegal gambling

[acroman08]

Kalshi faces another lawsuit, and this time it is for offering sports betting and allowing people to place sports wagers in the state, which violates the state gambling law in New Mexico.

If you are curious about their previous lawsuit, they got sued by the Sandia, Isleta and Pojoaque Pueblos and the Mescalero Apache Tribe for allowing individuals aged 18 and over(the state required for people to gamble in the state is 21) on their platform and people being able to place bets on tribal lands, saying that it is impacting tribal sovereignty and sports gambling rights.

New Mexico has become the latest state to go after prediction markets, targeting Kalshi in a new lawsuit that alleges the platform hewed too closely to what sportsbooks offer.

The New Mexico Department of Justice is suing Kalshi, joining four of the state’s tribes that launched a similar legal action against the firm in May.

Tribes and Now the State Are After Kalshi in New Mexico
The Sandia, Isleta and Pojoaque Pueblos and the Mescalero Apache Tribe previously sued the platform over its availability to individuals aged 18 and over and the fact that people use Kalshi’s app to “place bets” (Kalshi argues that it facilitates trades, not bets) on tribal land, alleging that it is impacting tribal sovereignty and sports gambling rights.

The Department has alleged that Kalshi is offering online sports betting in the state by allowing people to place sports wagers in violation of existing state laws.

Attorney General Raúl Torrez agrees with this conclusion and joins his counterparts in New York, Massachusetts, Kentucky and Illinois in launching similar actions against the platform and the sector as a whole.

This has drawn a response from the Commodity Futures Trading Commission (CFTC), which argues that legal actions against prediction market platforms under state laws are an attempt to preempt its exclusive authority over the sector. Torrez disagrees.

“New Mexico has a longstanding and carefully balanced system for regulating gaming that protects consumers, ensures accountability and respects tribal sovereignty,” the attorney general said.

He further insisted that the only licensed forms of gambling in the state are permitted under existing tribal-state gaming compacts or under strict state regulations, ensuring these operations are free of corruption.

“Kalshi has ignored that framework entirely while offering online sports betting within the state,” Torrez insisted, adding that the lawsuit is meant to protect the integrity of state laws and the existing regulatory system, and, not least, consumer safety.

Kalshi Pushes Back on Any Attempts to Define It as Gambling
Kalshi has repeatedly denied that its products constitute gambling and has insisted that state laws do not apply to it. The company did, however, join the National Council on Problem Gambling in a bid to strengthen consumer protection measures, a nod to the fact that prediction markets may still lead to excessive behavior in some customers.

The company has nonetheless been adamant in rebuffing any suggestion of gambling ties, with recent filings to the US Patent and Trademark Office seeing it remove any mentions of gambling from its IP.

The Department further insists that by offering event contracts, Kalshi effectively makes it possible for anyone to place a sports bet in the state, despite the platform holding no gaming license.

Another key issue is that the platform has set its minimum admittance age at 18, three years below the state-required 21.

[Merit.s]

Kashi and other prediction market are funny. I wonder how they will survive in their business without a government license when they know that the government always love to cut their own share from such business because they know how much is entering the platform.

I am not surprised that New Mexico has filed a lawsuit against Kalshi and this wouldn't be the last. More countries, will continue to file a lawsuit on them and ban them from operating in their countries since, they don't want to do the needful and enjoy their business.

[CryptSafe]

Kashi and other prediction market are funny. I wonder how they will survive in their business without a government license when they know that the government always love to cut their own share from such business because they know how much is entering the platform.

I am not surprised that New Mexico has filed a lawsuit against Kalshi and this wouldn't be the last. More countries, will continue to file a lawsuit on them and ban them from operating in their countries since, they don't want to do the needful and enjoy their business.

There is a sayings that says " give to Ceaser what belongs to Ceaser" Kashi has failed to recognise the fact that every territory has their own jurisdiction which demands that there be some form of courtesy amongst organisations who wants to benefit from them but the truth is that you can not benefit all alone from the system without recognising the entity that made that territory comfortable for you to run your business and make good profit from it hence you must be able to identify and recognise the government by giving them what rightly belongs to them and not have it all alone. Only then would the government understand the same language with them.

[Dr.Bitcoin_Strange]

This has been the confusion, with many calling it gambling platform while they deny such claim. Personally, I already said that they are just covering a mask of "we are investment company" But they are listing events which is supposed to only be on the bookie because it has a complete characters of gambling game.  I was even saying that those prediction platform can have bookie where they just list those sports event, probably they might not have problems if they do it like that.

[danherbias07]

Oh, that's going to be a problem. Yeah, there are a lot of countries that let people 18 years old and above to gamble, but it's different in other countries. I bet they didn't realize that initially, and now that a lawsuit has come, they will probably change it. But they will still have to answer to it and probably pay too.

Although they did try to cry to someone else so that they could be protected.
Here.

The Commodity Futures Trading Commission plans to sue New Mexico to prevent it from blocking sports-event contracts in the state, Front Office Sports has learned. The suit is expected to be filed Friday afternoon in federal court, according to FOS sources.

It comes as a response to New Mexico suing Kalshi in state court on June 4. The federal regulator is asking the court to rule that it has exclusive jurisdiction to regulate sports-event contracts, and also seeks a permanent injunction that would bar New Mexico from enforcing state gambling laws against prediction-market platforms that fall under the CFTC’s purview.

Yahoo Finance Link

Now what will New Mexico do?
Perhaps an alliance will be helpful with these states.

New Mexico is the eighth state to be sued by the CFTC since April 2, when the regulator launched lawsuits against Illinois, Arizona, and Connecticut. Since then, it has also sued New York, Rhode Island, Wisconsin, and Minnesota.

[Cryptomultiplier]

Kashi and other prediction market are funny. I wonder how they will survive in their business without a government license when they know that the government always love to cut their own share from such business because they know how much is entering the platform.

I am not surprised that New Mexico has filed a lawsuit against Kalshi and this wouldn't be the last. More countries, will continue to file a lawsuit on them and ban them from operating in their countries since, they don't want to do the needful and enjoy their business.

New york, Massachusetts, Kentucky and Illinois also have similar legal actions against the predictions market and now new Mexico.
Like I have said in previous post about the predictions market, they don't see themselves as a gambling platform but distinct and prefer that new regulations be made to their own favor.

These legal actions keep rising because the government still thinks they are a kind of gambling and until they see it the way the predictions market and Kalshi who is the accused in this case, sees it, am very certain more lawsuits would arise and at worst case scenario successfully drive these predictions market underground to operate strictly on decentralized channels that government can't control.

[PX-Z]

If you look at their site's description on google, it says, "Kalshi is a regulated exchange and prediction market." If it turns out they weren't actually regulated, then they would deserve to face legal action for making such claims. Even if they eventually win the case, it would still cost them significant time and resources to deal with the proceedings. And if they fail to defend themselves, they could end up facing penalties or other legal consequences that could take their whole wallets.

[alani123]

So instead of Kalshi SUING a state this time a state is suing Kalshi. That's good to know actually I kinda of expected that. Prediction markets are just casinos and even more arbitrary in their decisions. They should be regulated just like all gambling if not more.

[bhadz]

Kalshi and then polymarket are expected to receive lawsuits that are filed against them. I am seeing the pattern of what happened to binance when they're not allowed to operate into the countries that have banned them for having no license. It's only a money matter that they're asking to get for a license to operate and this is going to be solved. I don't know how backdoors do with kalshi and all of these companies so, it's starting to get into that point that these countries will ask for an operating license when they become big and for them to have a piece of the revenue.

[DPHOR]

Kashi and other prediction market are funny. I wonder how they will survive in their business without a government license when they know that the government always love to cut their own share from such business because they know how much is entering the platform.

I am not surprised that New Mexico has filed a lawsuit against Kalshi and this wouldn't be the last. More countries, will continue to file a lawsuit on them and ban them from operating in their countries since, they don't want to do the needful and enjoy their business.

There is a sayings that says " give to Ceaser what belongs to Ceaser" Kashi has failed to recognise the fact that every territory has their own jurisdiction which demands that there be some form of courtesy amongst organisations who wants to benefit from them but the truth is that you can not benefit all alone from the system without recognising the entity that made that territory comfortable for you to run your business and make good profit from it hence you must be able to identify and recognise the government by giving them what rightly belongs to them and not have it all alone. Only then would the government understand the same language with them.

Kalshi and polymarket are not doing the right thing or do I say that they are not transparent enough?
To be frank, these two prediction market are also saying that they are not gambling site that they are prediction market, but they forgot that "whatever that touches eyes surely affected the nurse"
Already they knew what they are doing but want to use indirect way to operate on some countries freely without even obtaining their operational license where in returned could be sanctioning or facing lawsuit for illegal operation on that country.

[Hispo]

At this pace and with all those lawsuits being put on the table against kalshi, I am afraid they won't be able to operate in the United States for too long.
It catches my attention how there are tribal territories in the United States that are getting out their comfort zone in order to go against Kalshi with this manner...

I get the administration of Kalshi did not take in consideration those tribal lands, considering how small and kind of irrelevant the can be to their daily volume of bets, but on the other hand, those lands and their local tribal government have the authority to sue organizations within the United States just like any other state administration.

Let us see if Kalshi can survive this wage of lawsuits and continue to operate from the USA, or they will be forced to move overseas.

[cryptomaniac_xxx]

Numbers are getting higher, states and countries that are against this kind of prediction market, Kalshi and Polymarket. They are trying to fight it out, but I don't think that they are going to survived in the long run as their market is getting thinning by the day.

The only way out of this is they want to continue with their business is to go under this authorities that might mandate KYC for all their customers. But that is the thing though, their market is like a wild wild west where everyone can bring their guns out. So it's a chaos right now but they don't want to fix it since it's the only way for them to make millions. Because if there are going to be under this regulators, then that profit might not be that big and their books are going to be scrutinized and who knows, they could be charge in the end. So they are in the lose-lose situation here and most likely just milking it.

[jeremypwr]

These prediction markets are gambling on steroids.
Anyone who doesn't consider them real gambling does not truly understand how they work.

[Bitcoin_Arena]

Is there anyone here who is surprised by such developments? I personally saw this coming; I just wasn't sure when. I expect them and other prediction markets to receive more lawsuits. From KYC/AML issues to operating in jurisdictions where they are not licensed to do so.
The more popular they become, the more lawsuits, fines, arrests

Before you know it, prediction markets are only accessible on platforms that are heavily regulated. Just looked at what happened to our beloved crypto exchanges.

[coinrifft]

I wonder though is Kalshi or Polymarket are going to respond to this accusations, if so how? Are they going one on one to answer all this allegations against them? Or they are just going to ignore them?

Because I haven't read any reply from them, unless I haven't search that deep to find it out. So it's going to be interesting for this market. As there could be gamblers here that are into this prediction market.

[YellowSwap]

Can anyone still tell the difference between a prediction market and gambling? There is no difference no matter how hard I try to put them apart, prediction market is gambling.

As for the case of Kalshi they know what's wrong and what's right, it seems they are intentionally operating illegally and there must be something favouring breaking the rules because I don't see any other reasons why they are doing this.

By now they should have learnt their lessons already, so it's possible that they know what they are doing after all.

[Accardo]

Can anyone still tell the difference between a prediction market and gambling? There is no difference no matter how hard I try to put them apart, prediction market is gambling.

As for the case of Kalshi they know what's wrong and what's right, it seems they are intentionally operating illegally and there must be something favouring breaking the rules because I don't see any other reasons why they are doing this.

By now they should have learnt their lessons already, so it's possible that they know what they are doing after all.

Things like this happen to platforms or projects trying to permeate markets accross the world, in all possible ways, predictions markets have fallen into restrictions many time over with the governing bodies of a state or nation, they do things paying no attention to the rules of the authorities in charge of a state, why allow users below 18 to gamble when the limit is 21 years old? They don't consider themselves gambling but go ahead to allow sport booking in their platforms, isn't it worth saying that they're looking for the attention of the governing authorities to gain massive attention.

[coin-investor]

Can anyone still tell the difference between a prediction market and gambling? There is no difference no matter how hard I try to put them apart, prediction market is gambling.

It's for the court to render judgment on the nature of their platform; they describe it as a regulated exchange & prediction market where you can trade on the outcomes of real-world events. That's their defense, but I doubt if the court will absolve them

By now they should have learnt their lessons already, so it's possible that they know what they are doing after all.

They should change direction, but that will only happen after the verdict, because they still defend themselves as a trading platform rather than a gambling platform.

[alegotardo]

Kashi and other prediction market are funny. I wonder how they will survive in their business without a government license when they know that the government always love to cut their own share from such business because they know how much is entering the platform.

I am not surprised that New Mexico has filed a lawsuit against Kalshi and this wouldn't be the last. More countries, will continue to file a lawsuit on them and ban them from operating in their countries since, they don't want to do the needful and enjoy their business.

They would not! But I think they will act the same way exchanges like Binance did at the beginning of their operations...

Their initial concern is adoption, even if illegal, because they know that laws usually take a long time and favor those who act illegally, since it is better to pay some fines and make agreements than to shut down an expanding market.
When legal measures are exhausted, then they worry about legalizing themselves, obtaining operating licenses, and adapting their activities to current local laws, but when that happens they already have a huge base of loyal users, so even if there is regulation, KYC, etc... users do what is asked, because they have become dependent on that service.

It is all strategy!

[Filicius]

This has been the confusion, with many calling it gambling platform while they deny such claim. Personally, I already said that they are just covering a mask of "we are investment company" But they are listing events which is supposed to only be on the bookie because it has a complete characters of gambling game.  I was even saying that those prediction platform can have bookie where they just list those sports event, probably they might not have problems if they do it like that.

This is the first time I hear about Kalshi, but the one you described is the same strategy Polymarket is using to avoid paying sky-high taxes. But one thing is what the companies say and another thing is how the governments interpret it. At the moment it seems that it is working for the latter, but the filling of this lawsuit may complicate things in the future.