Kalshi and multiple state government officials in Montana have submitted a joint request to dismiss the former’s lawsuit against the latter, potentially ending one of the least dramatic of all the disputes that Kalshi has initiated against state governments. The agreement features Kalshi dropping all of its claims against Montana authorities in exchange for a commitment that the state’s gambling regulators will not take action against event contract trading on the platform.
Kalshi’s lawsuit was a response to cease-and-desist letters from the Montana Department of Justice’s Gambling Control Division, but the dismissal agreement would preclude that division from enforcing those orders. The agreement does leave room for Montana’s highest law enforcement officer to take action against Kalshi in light of a recent opinion from the US Ninth Circuit Court of Appeals, though.
Kalshi asks court to dismiss lawsuit against Montana government figures
Kalshi filed its latest request to the US District Court for the District of Montana on Thursday. The joint stipulation of dismissal would close the matter, at least for the time being, if the court approves.
To secure the dismissal, the defendants agree that they “will not commence, pursue, or refer for prosecution any civil or criminal enforcement action, investigation, cease-and-desist proceeding, or other administrative action against Kalshi…with respect to Kalshi’s role in transactions involving event contracts traded on a designated contract market…until the later of (i) Kalshi’s request for further review being denied, or (ii) the issuance of an en banc decision” from the Ninth Circuit. The potential en banc decision that the brief references comes from Kalshi v. Assad, which is the company’s complaint against Nevada officials.
A three-judge panel from the Ninth Circuit ruled in Kalshi v. Assad that sports event contract trading on the platform is legally tantamount to gambling and that Nevada authorities can therefore enforce the state’s gaming laws against Kalshi. Kalshi has asked for the full Ninth Circuit to review that opinion (an en banc hearing) while Robinhood has petitioned the US Supreme Court for a review of the same.
Neither the Ninth Circuit nor the Supreme Court have yet announced whether they will grant those requests. Another tenet of the joint stipulation provides for the chance that the Ninth Circuit will deny the rehearing or uphold the panel decision, though.
Stipulation preserves Montana attorney general’s enforcement powers
Although a pair of cessation demands from gaming regulators in Montana would effectively become null if the court approves these stipulations, Kalshi is not gaining immunity from Montana law in this agreement. Montana Attorney General Austin Knudsen would retain discretion over whether to pursue any enforcement.
“The Montana Attorney General has the authority to initiate or pursue any enforcement action against Kalshi in their own right,” the brief reads, and “Kalshi’s agreement to dismiss the Commission Defendants with prejudice is made in reliance on these statutory authorities.” That provision is crucial because Montana is within the jurisdiction of the Ninth Circuit.
The Ninth Circuit panel’s ruling in Kalshi v. Assad has already produced ramifications across the court’s jurisdiction. Arizona officials have asked the Ninth Circuit to dissolve an injunction against their enforcement based on that ruling.
The language leaving the door open for Knudsen or a successor to take action also reflects that opinion. If the ruling from the Ninth Circuit panel holds up to further scrutiny, Knudsen may then move on the issue of Kalshi’s offering sports event contract trading in the state.
