Kalsi sues New York regulators following Crypto.com’s Nevada losses

Event contracting platform Carsi filed a federal lawsuit Monday against regulators in New York state, seeking to prevent the state’s gaming commission from treating sports prediction markets as illegal gambling, a preemptive strike just weeks after rival Crypto.com lost a similar battle in Nevada.

The Manhattan-based company argues that federal law preempts state gambling regulations for contracts traded on platforms overseen by the Commodity Futures Trading Commission. filing.

Carsi filed the lawsuit on Friday after receiving a cease-and-desist letter from the New York State Gaming Commission that said he could face civil penalties and criminal charges if he did not suspend the sporting event contract.

“In five out of six cases, Mr. Carsi took the lead and filed the lawsuit first, because most states require advance notice before filing suit against a company that repeatedly and persistently violates state law,” said Daniel Wallach, founder and president of Wallach Legal LLC, a law firm specializing in sports betting and gambling law. decryption.

The advance notice was a “reminder for Kalsi” to first file the case in federal court and “focus the case” around whether federal law preempts state authority, rather than whether the contract constitutes legal gambling, he added.

By filing first, Kalsi can avoid a trial in state court, where “the issue is not about who has jurisdiction, but whether these contracts are legal,” Wallach said.

Sometimes you win, sometimes you lose

Mr. Carsi won preliminary injunctions in New Jersey and Nevada, but lost in Maryland when a judge ordered a suspension of the sporting event contract. However, authorities allowed the operation to continue until the incident was resolved.

Two weeks ago, U.S. District Judge Andrew P. Gordon of Nevada Deny Crypto.com Information request for injunctiona reversal from the same judge as before. The judgment was given in favor of Kalsi. In a similar situation.

Initially, Wallach said, “Carsi was able to effectively persuade the two courts in advance that the combination of swap’s broad definition and exclusive jurisdiction language gave the CFTC exclusive regulatory authority over all contracts traded on CFTC-designated exchanges.”

Judge Gordon accepted this argument in Carsi’s case, focusing solely on whether the contract technically qualified as a swap.

However, in the Crypto.com case, a judge ruled that the outcome of a sporting event does not qualify to be treated as a swap. “Whether or not it’s a swap under the Commodity Exchange Act depends on whether an event occurs,” Wallach explained.

He added that the court analyzed the issue through Congressional intent, citing legislative history and comments from lawmakers, and concluded that the CFTC’s exclusive swaps jurisdiction was not intended to cover sporting event contracts.

According to the Nevada Gaming Control Board, Crypto.com must geofence Nevada by November 3rd and close all sporting event-related job openings to state residents pending an appeal. news.

Wallach predicts that Arizona and Illinois, which have issued cease-and-desist letters and warned state-licensed operators against prediction markets, will likely be next to sue Calci.

He expects more states to file lawsuits against Kalsi, Robinhood, and Crypto.com in the coming months, given recent court decisions in their favor.

Karshi and Crypto.com did not respond immediately decryption Request for comments.