Prediction market platform Kalshi is defending itself against increasing legal scrutiny. The company filed a lawsuit against Rhode Island authorities and also sent a cease-and-desist letter to FairPredicts, a group that has been running an ad campaign with the tagline “Kalshi Lies.” 

Kalshi has attempted to preempt enforcement actions from state regulators by suing authorities in federal courts. The company believes it has a better chance of success there than in state courts, which may be more sympathetic to state regulators’ arguments. 

The lawsuit against Rhode Island states that it “believes Rhode Island will imminently bring an enforcement action against Kalshi with the intent to prevent Kalshi from offering event contracts for trading on its federally regulated exchange.”

Rhode Island Sues Kalshi and Polymarket

Whether it was pre-planned or a response to the lawsuit, Rhode Island’s Attorney General announced that it was suing Kalshi and Polymarket later that day. 

“There is no substantive difference between sports betting and ‘events contracts’ in this context; Kalshi and Polymarket know that, and we know that,” said Attorney General Peter Neronha in a press release. 

“The problem here is that Rhode Island State law heavily regulates gambling, for good reason, and we allege that Kalshi and Polymarket are evading our laws.”

Currently, Rhode Island residents can wager on esports at Kalshi and Polymarket, but not at a legally regulated sportsbook. Rhode Island only offers one option for sports betting, Rhode Island Sportsbook, although it recently announced that Bally’s will also be granted a license to launch its online platform. 

That could see legal esports betting made official as Bally’s offers odds on major events in other states. 

Kalshi Encouraging Addictive Behaviors, Claims AG

The complaint filed by Neronha alleges that “Kalshi and Polymarket not only function as betting platforms, but also adopt the design and terminology of traditional gambling operations.” 

“For example, Kalshi prompts users to gamble with leaderboards and constant updates on how other users are placing bets. Such design choices have long been known to encourage addictive gambling behavior.”

Kalshi signed up as a member of the National Council on Problem Gambling (NCPG) earlier this week. That would appear to be an admission that the company is operating a gambling platform, as state regulators allege. However, the NCPG created a special category for the company, officially classifying it as its first and only Financial Services & Trading member. 

In a press release, Kalshi CEO Tarek Mansour stated, “As prediction markets continue to evolve, we are deeply committed to setting a new standard for responsible trading by investing in the tools, education, and protections needed to promote healthy participation and customer safety and hope that over time all trading platforms with significant retail participation follow suit.”

Kalshi Lies Campaign Prompts C&D Order

In addition to the legal actions in Rhode Island, Kalshi lawyers were also busy on Thursday issuing a cease-and-desist order against FairPredicts. 

The group, which has not revealed its funding source, has been running an ad campaign with the tagline “Kalshi Lies.” 

It alleges that Kalshi is misleading users and is actually acting more like a sportsbook with the majority of trades conducted through its in-house trading arm, Kalshi Trading, and other institutional market makers. 

In Kalshi’s cease-and-desist letter against the group, it claims they are the ones spreading lies. The letter states that FairPredicts is involved in the “publication, dissemination, and paid promotion of false, misleading, defamatory, and commercially disparaging statements”.

Kalshi Not The House, Claims Company

The company reasserts that it is not the house; Kalshi Trading is only one of many market makers that provide liquidity on the exchange. It also says that the trading arm is overall in a net negative. 

Kalshi spokesperson Elisabeth Diana said she suspects casino interests are funding the campaign. 

“Smells like a casino-led effort,” Diana stated. “Prediction markets are fair, transparent, and open. Casinos limit winners (unfair), price with algorithms (opaque), and set the odds themselves (closed). FairPredicts or UnfairPredicts?”

Kalshi warns that if FairPredicts does not immediately stop its campaign, it will pursue further legal action against the group. Its legal fight with Rhode Island means it is now involved in court cases in over 20 states. 

Circuit Split Could Lead To Supreme Court Hearing

In New Jersey, state regulators have said they will take the case to the Supreme Court after the Third Circuit ruled in favor of Kalshi. 

In the Ninth Circuit, meanwhile, on Thursday, a judge denied Kalshi’s and Polymarket’s motions for a stay pending appeal. This sends civil enforcement actions back to state courts in Nevada and Washington. Nevada is the only state to have successfully restricted Kalshi thus far. It also restricts Polymarket, as well as Crypto.com. 

With a circuit split in the rulings, that could accelerate a Supreme Court hearing. A Supreme Court ruling could eventually clarify whether prediction markets, particularly those on sports, fall under federal or state law.

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Bally’s will become the second active online sports betting platform in Rhode Island after the company secured a license in the state. 

Rhode Island launched sports betting in 2019, but offers users only one option, Sportsbook Rhode Island. The state extended its deal with IGT to operate the platform earlier this year, but also opened the door for another company to enter the market. 

Bally’s was confirmed as the new licensee on Wednesday, with Lottery Deputy Director Michael O’Rourke admitting it was not a competitive application process. Only one other operator applied, Rush Street Interactive. 

“Bally’s is thrilled to have been awarded a second sports betting license by the State of Rhode Island,” said spokesperson Patti Doyle. “We appreciate the confidence and trust the State has placed in our ability to provide a best-in-class product – built for scalability, innovation, and the evolving demands of modern bettors – which will generate additional revenue to benefit the Rhode Island taxpayers.”

High Tax Rate Puts Off Applicants

“There was a hope we’d get more companies to reply, but they didn’t,” O’Rourke told NBC 10. The prohibitive 51% tax rate on gambling revenue may have put many companies off. 

“I think that was part of the reason some of the companies did not respond,” O’Rourke admitted. 

Rhode Island’s tax rate is the highest in the country, along with New York and New Hampshire. New Yorkers wager more than any other state, which is some compensation for the high tax rate. Rhode Island, with a population of just over 1 million, is a less attractive proposition. 

Bally’s already operates the state’s two licensed casinos in Lincoln and Tiverton, meaning it already gets a cut of the sports betting revenue. 

Under the state’s revenue-sharing structure, the state receives 51% in taxes, the online operator collects 32%, and the physical sportsbook gets 17%. With a foothold in the state already, Bally’s seemed the obvious choice to launch an online platform. 

Esports Betting Could Be Launched At Bally’s

Sportsbook Rhode Island does not currently offer esports betting, but Bally’s online platform, Bally Bet, offers odds on most major events. 

The platform will go live in Rhode Island in November, and esports could feature on the app. Bally’s has had a keen interest in esports over recent years and made a $100 million offer to acquire Allied Esports in 2021. In the end, it lost out to private investment firm Element Partners.

In the same year, Bally’s successfully completed its acquisition of Gamesys, which fuels its online betting engine. The company’s technology allows it to manage thousands of micro-bets per second and offer a wide range of in-play esports markets. 

Bally’s is looking to expand its online presence with the acquisition of evoke, the parent company of popular online platforms William Hill and 888. The company is rumored to be the frontrunner as the struggling UK-based gambling group looks for buyers.

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Dead Island 2’s release date has been quite the saga.

Today, Dambuster Studios revealed Dead Island 2 will now make its zombie-riddled debut a week earlier than previously announced.

Yes, make a new note in your diary, as its release date has changed again. We are now expecting the game to launch on 21st April.

“You asked for it, you got it,” the developer shared in a brief update today alongside a collection of messages imploring the Dead Island 2 team to finally get the game out the door.

Needless to say, knowing the game has finally gone gold is a very exciting milestone for all those eager to get their hands on more zombie gore. After all, the game was initially announced all the way back in 2014.

Dead Island 2 is currently available to preorder through the game’s site. Those that choose to do this will get some customary preorder bonuses.

Additionally, when Dead Island 2 does release, it will come with a new gaming feature known as Alexa Game Control.

This feature, announced by Amazon last year, will see players be able to control aspects of their game via voice activated software. In Dead Island 2, this will mean users will be able to help them navigate through LA (or Hell A, as the Dead Island 2 team has branded it) by saying things such as “where is the nearest workbench”.

What holds the most potential for fun, perhaps, is that this new feature will allow Dead Island 2 players to “manipulate zombie hordes” by saying “Hey zombie” into the mic.

For more on Dead Island 2, check out Ian’s interview with developers David Stenton and James Worral, where they talk more about their new and improved version of the game.

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