It was another busy week in the prediction market space for several key stakeholders.
This week, a District Court judge denied Kalshi’s motion for a preliminary injunction in New York to allow the prediction market to keep its sports event contracts online.
In North Carolina, Gov. Josh Stein signed a state budget that imposes a 6% tax rate on net trading fee revenue for prediction markets.
Meanwhile, sports event contracts led a discussion amongst gaming stakeholders during this week’s National Council of Legislators from Gaming States Summer Meeting. The discussion included dialogue about how state lawmakers can fight sports event contracts.
Here’s more news for SBC’s latest edition of Prediction Markets Weekly.
Kalshi allowed to use addresses to block sports contracts
Kalshi scored a win in Michigan this week after a Circuit Court amended a temporary restraining order (TRO) against the company for its delivery of sports event contracts.
The amended TRO allows the court to evaluate Kalshi’s ability to geofence in Michigan as the prediction market actively blocks its users in the state from accessing sports event contracts by leveraging addresses tied to active trading accounts. An emergency motion filed by Kalshi last week allows the company to use addresses to block access.
The initial TRO, granted by Circuit Court Judge Rosemarie Aquilina last week, required Kalshi to utilize a third-party geolocation service to block access to sports event contracts during a 14-day period. The order also required Kalshi to pay a $120,000 fine for every day it failed to comply with the geolocation portion of the TRO.
Kalshi is appealing the TRO sought by Michigan Attorney General Dana Nessel, but is now temporarily allowed to use addresses instead of geofencing to block sports contracts.
Brian Quintenz joins prediction market trade group
The Coalition for Prediction Markets has tapped former Commodity Futures Trading Commission (CFTC) Commissioner Brian Quintenz as a senior advisor.
In his new role, Quintenz will engage with key stakeholders in finance and prediction markets to provide guidance on regulation as event contracts face pushback from states and their officials regarding whether the CFTC has federal authority over the products.
“Regulated prediction markets have created a new information economy built on radical transparency, fairness, and real opportunity for people on Main Street – not just institutions on Wall Street,” said Quintenz.
“I’m thrilled to continue my work to ensure these markets grow here in the United States through a federal regulatory framework that keeps American markets the best in the world.”
Quintenz, a Kalshi board member, is working with the Coalition of Prediction Markets after a failed effort to lead the CFTC. Last year, President Donald Trump’s administration dissolved its plans to confirm Quintenz as CFTC chair after a stalled vetting process. The process stalled after crypto billionaires Tyler and Cameron Winklevoss reportedly urged Trump to reconsider his choice.
The American Gaming Association and several tribal associations also voiced concerns about Quintenz assuming the role of CFTC chair.
Quintenz received pushback after sharing his views on the CFTC and prediction markets offering sports event contracts during a hearing in a Senate subcommittee last June. He will now leverage his experience as a former CFTC commissioner to support the coalition.
Kalshi faces class-action lawsuit in New York
Kalshi’s legal proceedings continue to pile up after a class-action lawsuit was filed against the company in the U.S. District Court for the Southern District of New York.
According to court documents, the plaintiffs in the case claim Kalshi illicitly collects information from users that is “sensitive, personally identifiable, and private.” The suit claims Kalshi shared the personal information and trading activity of account holders with third-party companies, including AppLovin, Google, TikTok, and LinkedIn.
The plaintiffs also claim Kalshi took records of what users searched and viewed. The group is seeking actual, punitive, and statutory damages, restitution, injunctive relief, and a declaratory judgment.
The suit’s class members include “individuals who accessed and used the digital platforms and whose communications, personally identifiable information and online activity were intercepted, disclosed, or transmitted to third parties without their consent.”
Goldman Sachs imposes ban on certain event contracts
Goldman Sachs implemented a new company-wide rule on Thursday by banning employees from trading event contracts tied to financial markets, financial companies, and elections. Despite the new trading rule, the banking giant is continuing to allow its employees to trade event contracts tied to sports and entertainment.
Potential penalties for violating the Goldman Sachs prediction market rule include the forfeiture of profits that exceed $200 or a donation to charity. The closure of an employee’s prediction market accounts and the termination of their employment are also on the table.
