Kalshi sues Minnesota seeks to join Wisconsin case; hires ex-FBI

Kalshi filed a lawsuit in Minnesota on May 27 and filed a motion on May 28 to intervene in a federal case in Wisconsin. On May 29 the company asked a judge to certify an immediate appeal in its case with the Ho-Chunk Nation. Kalshi added a former FBI intelligence analyst to its market surveillance team.

In Minnesota Kalshi sued after the state enacted a second ban on prediction markets. The complaint says the new law criminalizes categories of contracts that Kalshi says are regulated at the federal level, including long-standing derivatives used for hedging and risk management in weather and agricultural markets. The complaint contends the statute conflicts with the Commodity Exchange Act and the Commodity Futures Trading Commission’s exclusive jurisdiction.

In Wisconsin Kalshi moved to intervene in the federal government’s lawsuit that challenges the state’s attempt to apply gambling laws to event contracts traded on a federally regulated exchange. Kalshi sought to join the U.S. Department of Justice and the Commodity Futures Trading Commission as a plaintiff. The company pointed to recent federal preliminary injunctions in other states that prevented state authorities from enforcing similar rules against event contracts.

Kalshi asked a federal judge on May 29 to certify an interlocutory appeal in its lawsuit with the Ho-Chunk Nation after a May 11 order denied parts of its motion to dismiss. The court found the tribe had plausibly alleged claims under the Indian Gaming Regulatory Act related to sports event contracts accessible on tribal land. Kalshi questioned whether tribal authorities can regulate derivatives traded on a federally designated contract market and whether alleged breaches of tribal gaming ordinances support IGRA claims. Kalshi requested permission to seek review by the U.S. Court of Appeals for the Seventh Circuit. The company’s response to the tribe’s amended complaint is due June 5.

Kalshi expanded its compliance team by hiring Tyler Neff, a former FBI intelligence analyst who spent seven years on a white-collar crime squad in the New York field office. Neff later worked at the New York Stock Exchange, Wedbush Securities and Canaccord Genuity. He will report to Kalshi’s head of enforcement and legal counsel, Robert DeNault, and help oversee surveillance operations. The company has added other staff with exchange and Wall Street experience in recent months.

Regulatory and enforcement scrutiny of prediction markets has increased after several incidents. Federal authorities charged a software engineer with alleged insider trading tied to trading on another exchange, accusing the defendant of using confidential company information to earn more than $1.2 million. In Kalshi’s ongoing Ohio appeal, the state’s response brief to Kalshi’s opening brief is due June 4.

Kalshi’s filings challenge whether states and tribes can apply gambling and gaming laws to event contracts traded on an exchange regulated at the federal level.