Kalshi Levies Lawsuit Against Montana After Second Cease-and-Desist Order

• Kalshi has filed a lawsuit against Montana Attorney General Austin Knudsen and several Montana Gambling Control Division representatives
• Counsel for Kalshi notes in lawsuit the Montana Gambling Control Division sent Kalshi a cease-and-desist order on April 6, 2026
• According to lawsuit, the state and Kalshi reached a non-enforcement agreement in April 2025

Kalshi has filed another lawsuit against state gaming officials, this time in Montana, after the prediction market company said state officials reversed course on a non-enforcement agreement reached in April 2025.

Kalshi filed a lawsuit against Montana Attorney General Austin Knudsen, several Montana Gambling Control Division representatives, and a number of other state gaming officials claiming a recent cease-and-desist notice from the state intrudes on the federal government’s “exclusive authority to regulate derivatives trading on exchanges overseen by the Commodity Futures Trading Commission (CFTC).”

According to counsel for Kalshi, the state and the prediction market company agreed to a non-enforcement agreement in April 2025, but the company was forced to file the new lawsuit after receiving a new cease-and-desist order from Montana officials on April 6, 2026.

Reversing Course on Legal Action

According to the lawsuit, Kalshi’s outside counsel met with representatives from the Montana Gambling Control Division in April 2025, coming to non-enforcement agreement with the division agreeing it would “not initiate any civil or criminal enforcement against Kalshi during the pendency of” ongoing litigation between Kalshi and Nevada officials.

However, the Montana Gaming Control Division levied another cease-and-desist letter to the company on April 6, 2026.

“As such, Kalshi faces an immediate threat that Defendants will attempt to enforce Montana’s preempted state laws against it. Montana’s stated intent to prohibit Kalshi from operating intrudes upon the federal regulatory framework that Congress established for regulating the trading of derivatives on federally designated exchanges. The state’s efforts to regulate Kalshi are preempted under principles of express preemption, field preemption, and conflict preemption. This Court should therefore issue both a preliminary and a permanent injunction, as well as grant declaratory relief,” counsel reported in the company lawsuit.

The basis for Kalshi’s lawsuit is similar to others it has filed against state gaming commissions, attorney generals, and gaming representatives.

Similar Lawsuit as Other States

Kalshi’s lawsuit against Montana – 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.