Kalshi faces legal challenge over gambling in Montana

MONTANA – Kalshi, a federally regulated futures exchange, is facing legal challenges in Montana over its operations. The app allows users to buy "yes" or "no" contracts on real-world outcomes, such as elections and sporting events, but state regulators argue it falls under Montana's gambling laws.

Kalshi operates under federal commodities law, permitting its services across state lines. However, Montana's Gambling Control Division claims that state law applies within Montana, making all online gambling illegal, including prediction markets.

Gambling Control Division Administrator Alex Sterhan emphasized Montana's stance, saying, "We kind of encapsulate all of that under the umbrella of illegal gambling in Montana. And so, you know, even more specifically in Montana, all online gambling in the state of Montana is illegal."

In March, Montana issued a cease-and-desist order to Kalshi, asserting the platform's operations are illegal in the state. The state's enforcement actions target operators rather than individual users.

Sterhan further explained the legal proceedings, stating, "We've had a cease and desist that's been out there for Kelce since last March. And so it's been through the it's been through the court system, things like that. And it was hung up in appeal with Nevada in the ninth Circuit, and we got a favorable ruling in our eyes."

With the Ninth Circuit ruling in favor of Montana, the state may proceed with additional civil action to enforce its cease-and-desist order. The case hinges on whether federal financial regulations limit the application of state gambling laws.

For now, Kalshi remains accessible in Montana, but state officials are committed to pursuing enforcement through the courts and may seek further clarity from lawmakers. The outcome of this legal process could define the extent of state gambling authority in the digital age.