(AsiaGameHub) –   Kalshi has initiated a federal lawsuit against the state of Montana, intensifying an ongoing disagreement over how prediction markets should be regulated in the United States. The firm claims that state authorities violated a prior agreement by moving to enforce local gambling laws against its platform.

At the core of the case is a broader industry debate: whether prediction markets should be classified as federally regulated financial products or as gambling activities subject to state-level laws. Kalshi asserts that its platform falls under federal jurisdiction and should not be restricted by individual states.

The dispute dates back to March of last year, when Montana regulators ordered Kalshi to halt operations in the state. The two sides later reached a temporary agreement, with Montana pausing enforcement while a similar legal case involving Kalshi in Nevada was underway.

However, tensions resurfaced after a federal judge in Nevada reversed earlier protections granted to Kalshi. Following that decision, Montana issued a new warning, stating it would take immediate legal action unless the company stopped its local services. Kalshi challenges this move, arguing that the original agreement was meant to remain in effect throughout the full legal process, including appeals.

In its lawsuit, Kalshi emphasizes federal preemption, noting that as a regulated event contracts platform, it falls under national commodity trading laws. The company argues this status prevents states from categorizing its services as gambling or enforcing local restrictions.

Kalshi is now seeking a temporary court order to block Montana from taking action while the case proceeds, as well as a permanent ruling that would bar the state from applying its gambling laws to the platform. It is also requesting a formal declaration that federal regulation overrides state authority in this area.

The outcome of the case could have significant implications for the future of prediction markets in the US, particularly for operators navigating conflicting state and federal rules.