Prediction market platform Kalshi has filed a lawsuit against Iowa regulators, claiming there is a substantial risk the state could bring enforcement action against its sports event contracts.
The company sued Iowa Attorney General Brenna Bird along with the Iowa Racing and Gaming Commission and its board in federal court on Wednesday.
In its complaint, Kalshi said there “is a substantial risk” the Iowa Attorney General could take enforcement action that would block its event contracts.
The lawsuit followed a meeting between a Kalshi representative and Iowa officials that the company said unexpectedly turned into questioning about whether its federally regulated offerings violated state law.
Kalshi argued that federal law gives the Commodity Futures Trading Commission exclusive jurisdiction over its event contracts as a designated contract market.
State regulators across the US have increasingly challenged prediction markets that allow users to trade on sports outcomes, arguing the products fall under state gambling laws.
Courts have issued mixed rulings on the issue, with some states temporarily blocked from enforcing restrictions while others have been allowed to proceed with actions against the company.