A new set of lawsuits from cryptocurrency group Coinbase suggest that enforcement action is imminent against Kalshi and other firms offering sports contracts in both Michigan and Illinois.
Coinbase filed a trio of lawsuits on Thursday in Connecticut, Michigan and Illinois. In all three suits, Coinbase alleges that the actions of the gaming regulators in those states compromise Coinbase’s planned business activities in the state. In the suit, the cryptocurrency site said it plans to host Kalshi contracts, including sports contracts, on its apps starting next month.
Coinbase claims IL and MI regulators about to act
The Connecticut Department of Consumer Protection (DOCP) sent Kalshi a cease and desist letter earlier this month and Kalshi responded by filing suit against the group the very next day. In its suits, Coinbase alleged that the Michigan Gaming Control Board (MGCB) and the Illinois Gaming Board (IGB) have sent several cease and desist letters to Kalshi and others and that it “expects defendants to imminently bring an enforcement action.”
The IGB and MGCB have both cautioned licensees in the state to be cautious about partnering with event contract companies or venturing into that vertical. Both the MGCB and the IGB went so far as to say that it would take conduct outside of state lines into consideration when considering suitability of its operators.
The suits did not specify what those enforcement actions might look like, but in all cases, the states’ Attorneys General, Dana Nessel, William Tong, and Kwame Raoul, in addition to state gaming regulators. In Massachusetts, Attorney General Andrea Joy Campbell was the first state official to go on the offensive against Kalshi and file suit against the company in state court for violating state sports betting laws.
Robinhood also taking regulators to court
The arguments in the suits are identical across the three filings and put forth many of the same points that have been filed in previous litigation from Kalshi and Robinhood.
Like Robinhood, Coinbase will function as a futures commission merchant (FCM) and host Kalshi contracts on its site. Robinhood also has active lawsuits against state regulators in Nevada, New Jersey. The company filed a lawsuit in Massachussetts after the state sued Kalshi, but the judge dismissed, arguing that since the state confirmed it would take no enforcement action until the state court ruled on the preliminary injunction that Robinhood’s filing was premature.
To date, Kalshi has not filed any suits against the MGCB or the IGB. In other states it has filed suits when cease and desist letters stipulate and enforcement date.
