They also signal a potentially coordinated effort by gaming stakeholders to reaffirm longstanding restrictions on sports wagering under federal law.
In what observers have called the most forceful legal response yet in the Kalshi litigation, Atlantic City casino interests submitted a detailed and aggressive brief criticizing both Kalshi and the Commodity Futures Trading Commission (CFTC).
The brief attacks Kalshi’s position on several legal fronts, particularly invoking the federal Wire Act and CFTC Rule 40.11(a), and accuses Kalshi of knowingly flouting existing gambling laws.
According to the Atlantic City filing, Kalshi is “presently violating the Wire Act,” an assertion previously made by gaming attorney and legal analyst Daniel Wallach and others.
Federal law prohibits the use of wire communication facilities to transmit bets or information assisting in the placement of bets on any sporting event or contest when such betting is illegal under state law.
This could have been one of the topics to be discussed at the CFTC roundtable on the subject, scheduled for 30 April.
However, Dustin Gouker said in a post on his Event Horizon blog that the meeting is no longer on the agenda. A reason hasn’t been given, and the CFTC has made no official announcement.
Kalshi may have set itself up for failure
There has been some discussion about the lack of applicability of the Wire Act.
The argument against it has asserted that Kalshi and other prediction markets aren’t offering betting products, which, to some, is just a question of semantics.
However, Kalshi has made it clear on numerous occasions that it is, in fact, offering betting products, and this might be its downfall.
While the company argues in court that its contracts are distinct from traditional betting products, its marketing and disclosures have frequently described its offerings in that align with betting.
As pointed out by Dustin in his blog “Ten Times Kalshi Said People Could Bet On Things,” Kalshi has directly asserted that s could bet on the platform.
Evidence includes a promotion by Kalshi that reads: “Breaking News: You can now bet on sports in all 50 states with Kalshi.”
It has also billed itself as the “First Nationwide Legal Sports Betting Platform”:
Critics argue that this self-characterisation could be used as evidence against Kalshi, particularly in relation to the Wire Act’s broad language prohibiting betting over telecommunications infrastructure.
The brief emphasizss that the Wire Act clearly applies to sports betting conducted over the Internet and asserts that Kalshi’s operation constitutes such activity.
‘Legally untenable’ arguments
The Atlantic City brief also rebuffs Kalshi’s statutory interpretation of the Commodity Exchange Act (CEA).It argues that Congress did not intend for the CEA to override other federal gaming statutes such as the Wire Act or the Indian Gaming Regulatory Act (IGRA).
Citing a principle of statutory construction that Congress does not “hide elephants in mouseholes,” the brief claims that Kalshi’s reading would imply an implicit repeal of critical gaming laws without clear legislative intent.
This is a notion it characterises as legally untenable.
A central pillar of the Atlantic City argument is CFTC Rule 40.11(a), which categorically prohibits event contracts involving terrorism, assassination, war, and gaming, as well as any activity unlawful under federal or state law.
The brief accuses Kalshi of ignoring this regulation in both its filings and operations, and contends that the rule was specifically enacted to prevent the listing of such controversial contracts following the age of the Dodd-Frank Act.
The filing also draws attention to what it describes as Kalshi’s inconsistent legal arguments across jurisdictions.
It notes that in Nevada, Kalshi failed to disclose the existence of Rule 40.11(a) and did not provide a rationale for how its contracts allegedly comply with federal law.
The brief argues that Kalshi’s contracts are essentially identical to those of Crypto.com, which the CFTC suspended shortly before Kalshi submitted its own self-certification—raising questions about Kalshi’s regulatory compliance and transparency.
Nevada moves to dismiss Kalshi suit
Simultaneously, Nevada filed its own motion to dismiss Kalshi’s complaint in the federal court case challenging the state’s gaming regulations.
The Nevada Attorney General’s Office echoed similar arguments about the Wire Act, stating that Kalshi’s offerings involve the interstate transmission of bets or wagers, a clear violation under current interpretations of the law by multiple circuit courts.
Nevada’s filing emphasises that Kalshi’s contracts allow individuals nationwide to bet on who will win or lose sporting events in exchange for monetary value, reinforcing the notion that Kalshi is operating as a sports wagering business.
Nevada also points to the Professional and Amateur Sports Protection Act (PASPA), which was enacted in 1992 to prohibit sports betting nationwide with limited exceptions, including Nevada.
The state argues that if Congress intended for the Commodity Exchange Act to preempt state gaming laws, as Kalshi contends, the later enactment of PASPA would have been unnecessary.
This contradiction, according to the motion, undermines Kalshi’s legal theory and justifies the dismissal of the complaint.
Adding to the intensifying legal landscape, a key hearing has been scheduled in Maryland, where Kalshi has filed a motion for a preliminary injunction against the state.
Judge Abelson will hear the case on 29 May, with Maryland’s response due by 9 May and Kalshi’s reply by 19 May.
The Maryland case presents another front in the growing conflict between Kalshi and state authorities over the legality of prediction markets based on sporting events.
