Arizona authorities issue cease-and-desist orders to Kalshi, Robinhood, and Crypto.com for alleged unauthorized operations within the state.
Fast-Growing Event Trading Platform, Kalshi, Faces Legal Challenges in Arizona
Kalshi, a popular event trading platform, has encountered regulatory obstacles in the state of Arizona, marking the seventh jurisdiction where the company is facing such hurdles. The Arizona Department of Gaming (ADG) has deemed the platform's offering of event trading as illegal and has requested Kalshi to cease its operations in the state.
According to a letter sent by the ADG, the platform's offering of future events, including sports, is in contravention of the established regulatory framework. Kalshi's contracts allow individuals to predict the outcome of an event and purchase a contract corresponding to their prediction. The ADG considers this practice a form of illegal gambling, as defined by Arizona law.
Additionally, the ADG pointed out that Kalshi is not licensed to operate event wagering in Arizona. The department emphasized that offering such services without a valid license is illegal in the state. The regulatory body also highlighted that Kalshi is bypassing regulatory requirements and age restrictions in Arizona by continuing its operations.
Besides Kalshi, cease-and-desist letters were also sent to Robinhood and Crypto.com, though the details regarding their specific operations in Arizona remain unclear. The ADG's actions in Arizona signify a broader regulatory challenge for event trading platforms, as they navigate the complex web of gambling laws in various states.
In a previous legal battle, Kalshi secured a temporary injunction from a federal court in New Jersey, arguing that gambling regulators have no mandate to regulate its activities, which fall under the oversight of the Commodity Futures Trading Commission on a federal level. The company is reportedly considering similar federal lawsuits in other states where it faces regulatory challenges.
The current regulatory stance in Arizona reflects a cautious approach towards online gambling operators, including various forms of wagering such as sports betting and peer-to-peer wagering. If event trading platforms like Robinhood and Crypto.com engage in similar activities without appropriate licensing, they are likely to face similar regulatory scrutiny in Arizona.
In light of these developments, event trading platforms must prioritize compliance and licensing to operate legally in Arizona and other states with similar regulatory frameworks. Failure to do so could result in legal repercussions, as seen with the cease-and-desist orders issued against Kalshi and potentially others.
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The event trading platform, Kalshi, has been deemed to be operating illegally in Arizona due to its offering of future events, including sports, which contravenes the state's regulatory framework and is considered a form of illegal gambling. Should Robinhood and Crypto.com, who have also received cease-and-desist letters in Arizona, engage in similar activities without appropriate licensing, they too may face similar regulatory scrutiny.
