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One day after filing a lawsuit against Kalshi, Michigan Attorney General Dana Nessel was targeted by a lawsuit filed by Kalshi's competitor Polymarket.
Key Takeaways
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Michigan became the 10th state to tangle with Kalshi in the courts.
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Polymarket preemptively filed a lawsuit against the Michigan AG and the Michigan Gaming Control Board.
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The number of lawsuits involving states and prediction market operators is hitting a critical mass, which is likely to lead to intervention by the U.S. Supreme Court.
Michigan Attorney General Dana Nessel filed a civil enforcement Tuesday against prediction market operator Kalshi in Ingham County Circuit Court. Gaming attorney Daniel Wallach broke the news.
The action wasn't necessarily a surprise. Michigan sports betting regulators announced an investigation into prediction markets last April . Michigan later warned retail casinos, internet gaming operators, and sportsbooks that operating prediction markets could cost them access into the state.
Michigan is hardly the first state to have an issue with prediction markets operating within its border. Once prediction market operators started offering futures contracts on sporting events, many states took issue.
Sports betting is currently regulated at the state level. Prediction market operators are not licensed or regulated by any state, nor do they pay state gaming taxes. States, therefore, allege that prediction markets are in violation of state laws. In fact, Michigan is now the 10th state Kalshi is battling in the courts.
Polymarket executes preemptive strike
Polymarket only recently reentered the U.S. market. So, it has not racked up the number of suits as its litigious peer Kalshi. But as of Wednesday, Polymarket has one more lawsuit on the books. Just one day after Michigan filed its suit against Kalshi, Polymarket retaliated with its own lawsuit.
Polymarket filed its lawsuit in the United States District Court for the Western District of Michigan on Wednesday. Michigan AG and the Michigan Gaming Control Board were cited as defendants. The suit states, "This action demonstrates Defendants' willingness to use state law to shut down federally authorized markets despite clear federal preemption."
Robinhood followed suit with a lawsuit of its own.
The states-versus-prediction markets lawsuits continue to grow in number. And at the heart, they all are fighting over the same issues. Can a federally regulated market provider bypass state gambling law? Do sporting event contracts constitute sports betting? Can federally regulated enterprises engage in gambling without the consent of Congress?
These are all weighty issues that are unlikely to be resolved by the lawsuits percolating in roughly a dozen states. At this point, it is just a matter of time before these cases head to the U.S Supreme Court.
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