Kalshi Sues Missouri Attorney General After Cease-and-Desist Notice

• Kalshi filed a lawsuit against Missouri Attorney General Jan Zimmerman
• Kalshi’s filed lawsuit is in response to a cease-and-desist notice from Missouri
• The prediction market company notes that Missouri’s attempt to prohibit its offerings “intrudes on the federal scheme”

Kalshi will not be abiding by a recent cease-and-desist notice it received from Missouri Attorney General Jan Zimmerman.

The prediction market company has filed a lawsuit against the state of Missouri and Attorney General Zimmerman in U.S. District Court Eastern District of Missouri Eastern Division. The litigation was filed after Kalshi received a cease-and-desist notice to pull its sports event contracts from the Show-Me State.

Kalshi seeks injunctive and declaratory relief to prevent Missouri officials from enforcing its gambling laws against its event contract markets.

No Choice But to Sue

Kalshi cited in its lawsuit that after receiving the recent cease-and-desist from the attorney general’s office the company was left with no choice but to sue.

“Missouri’s attempt to prohibit Kalshi from operating is a form of regulation that intrudes on the federal scheme. The letter gives Kalshi only two options: cease and desist, or obtain a Missouri Gaming Commission license, pay all associated state taxes and fees, and stop serving Missourians under 21 years of age,” counsel wrote in its lawsuit.

The Commodity Exchange Act, counsel wrote in the lawsuit, grants the Commodity Futures Trading Commission the “exclusion jurisdiction” over swaps traded on DCMs. Missouri’s intent to prohibit Kalshi from operating “contravenes all these Congressional commands.”

Kalshi asserts that no Missouri sports betting license is “realistically available” to the company, as the Missouri Gaming Commission only authorizes retail and online sports betting licenses. Retail licenses are only available for those with casino licenses and online sports betting licenses are only available to licensed casino operators, professional sports teams, or sports betting operators acting on behalf of either pursuant to a commercial agreement.

“Even if Kalshi could obtain a license, which it cannot under Missouri’s own regime, it could not operate within that regime without jeopardizing its federal designation. Missouri law requires licensed operators to comply with a host of state-specific restrictions that cannot be reconciled with the CEA,” counsel wrote in the lawsuit.

Missouri Confident in Federal Court Ruling

Missouri Attorney General Hanaway in early September sent cease-and-desist notices to six prediction market companies operating in the state. Kalshi, Polymarket, Robinhood, Underdog, Novig, and Crypto.com received notices.

A spokesperson for the Missouri Attorney General’s Office told Sports Betting Dime that rules for all bets should be the same regardless of whether they’re placed at a sportsbook or through the trade of a sports event contract.

“If you are going to bet on the Chiefs beating the Broncos, the rules should be the same regardless of whether the bet is placed through an online prediction market or at the casino. In both situations, it’s sports betting – and Missourians voted to subject sports betting to licensing and taxation rules. Attorney General Hanaway will enforce the law, and we are confident the federal courts will not prevent her from doing so,” the spokesperson said.