Kalshi Files Preemptive Lawsuit Against Iowa After Attorney General Meeting

• Kalshi has filed a lawsuit against the Iowa Attorney General and the Iowa Racing and Gaming Commission
• The company filed for a permanent injunction and declaratory relief to keep the state from taking action against its event contracts
• A recent meeting with Iowa Attorney General Brenna Bird factored into the decision to file the lawsuit

Iowa has yet to take any official action against prediction market companies, but Kalshi yesterday preemptively filed a lawsuit against the state.

Kalshi filed a lawsuit in U.S. District Court for the Southern District of Iowa Central Division against Attorney General Brenna Bird and the Iowa Racing and Gaming Commission. The company filed a complaint for a permanent injunction and declaratory relief to keep the state from taking action against its event contracts, particularly its sports event offerings.

Kalshi’s decision to file a lawsuit came in part after a March 4, 2026 meeting with Attorney General Bird, in which the company said it was made clear that she believes Kalshi’s prediction market offerings run afoul of Iowa state law.

AG Meeting ‘Like a Deposition’

Counsel for Kalshi reported a March 4, 2026 meeting with Bird factored into the company’s decision to take preemptive action against the state. In what was thought to be a meeting to introduce the attorney general to a Kalshi representative and to discuss a tax bill under consideration in the state legislature, the meeting shifted into what was described as “like a deposition.”

According to the lawsuit, Bird explained during the meeting that Iowa has been “looking at Kalshi for a long time.”

“Understandably concerned by the tenor of what was intended to be a friendly meeting on a different topic, on March 10, 2026, Kalshi contacted a representative of the Iowa AG to seek assurances that the Iowa AG did not intend to bring an enforcement action against Kalshi. The representative did not provide such assurances. To the contrary, the official said in writing that ‘we will not give any assurances about potential future enforcement.'”

Counsel reported in the lawsuit that Bird made it “abundantly clear that she believes Kalshi’s event contracts constitute unlawful gaming” and put Kalshi at risk of civil or criminal enforcement in the state.

“Accordingly, Defendants’ anticipated actions threaten impending and irreparable harm, not just to Kalshi, but to its customers and commercial counterparties. Shutting down Kalshi’s ability to offer event contracts in Iowa would threaten Kalshi’s viability and require devising complex technological solutions whose feasibility is entirely untested and unclear,” counsel reported.

Counsel reported that by threatening to enforce Iowa’s anti-gambling laws against the company, the defendants are intruding on the Commodity Futures Trading Commission’s (CFTC) exclusive authority to regulate futures trading on CFTC-regulated exchanges.

Lawsuit Similar in Other States

Kalshi’s lawsuit against the Iowa Attorney General and Iowa Racing and Gaming Commission – and all of its lawsuits against state gaming commissions – revolves around the central question of who regulates sports event contracts, and prediction markets, in general.

Companies such as Robinhood, Kalshi, and Crypto.com believe that state regulatory bodies do not have the right to intrude on the government’s “exclusive” authority to regulate prediction market, filing lawsuits in several states to defend its practices. These companies believe the CFTC is the only regulatory body that can legally block contracts from being offered to customers.

State gaming regulators maintain the markets need to be beholden to regulations, taxes, and license fees that sports betting and gaming operators are required to follow.

The prediction market companies believe their offerings are not required to comply with state laws, as they have been preempted by the Commodity Exchange Act.