Kalsi faces a new state-level lawsuit Friday after the state of Washington filed allegations that the prediction market operator violated state gaming laws with its products.
The Washington State Attorney General’s complaint alleges that Mr. Carsi violated the Washington Consumer Protection Act, Gambling Law, and Lost Gambling Money Recovery Act, citing the Pacific Northwest state’s existing online gambling ban and other intense scrutiny of gaming markets.
“The Kalsi website and app will display to consumers the various events they can bet on and the odds for those events, which will determine the amount bettors will be paid if the event occurs,” a statement from Attorney General Nick Brown said. “This is exactly how sportsbooks and other gambling businesses work. Kalsi advertises that consumers can ‘bet on anything’ by simply calling their service a ‘prediction market’ rather than ‘gambling.’”
The definition of gambling under Washington law is “the betting or risking of something of value on the outcome of a game of chance or a chance event in the future,” and Kalsi’s activities fit that definition, the AG’s statement said. “Each Karshi bet risks money, relies partly on chance, and promises a payout to the winner.”
Mr. Carsi called for the case to be immediately transferred to federal court, saying the issues raised in the Washington state case were already being litigated in other federal courts and that there was “no warning or dialogue” from Washington state before the lawsuit was filed.
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State auditors and gaming regulators begin legal battle across the country
Earlier this month, a Nevada judge temporarily blocked Calci from operating in the state, ruling that state officials have a strong chance of prevailing in a legal battle over whether the company’s event contracts violate Nevada gaming law.
Carson City District Court Judge Jason Woodbury on Friday granted a temporary restraining order, granting the Nevada Gaming Control Board a motion to prevent Carsi from operating in the state for 14 days.
Mr. Carsi had argued that the contract fell under the exclusive jurisdiction of the U.S. Commodity Futures Trading Commission. The commission is the agency that has supported prediction markets that are being challenged in multiple state courts for allegedly offering illegal gambling.
Days earlier, Arizona Attorney General Chris Mays announced charges against the companies behind Calci, alleging they operated an “unlicensed and illegal gambling operation in Arizona” and provided illegal election gambling.
Carsi faces several similar lawsuits brought by gaming authorities in other U.S. states for allegedly offering sports betting to residents without a license, but Arizona is one of the first to file criminal charges.
The state-level lawsuit comes as prediction markets are under scrutiny from lawmakers for suggesting bets on U.S. military action, citing concerns about insider information within the government.
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