This week, the U.S. gambling sector is abuzz with significant developments surrounding DraftKings and Kalshi, particularly as state legislative deadlines loom.
As March Madness progresses into the Sweet 16, DraftKings is still utilizing official terminology despite facing a lawsuit from the NCAA. In contrast, Kalshi is grappling with mounting legal issues across various states. Additionally, several key legislative initiatives are nearing crucial deadlines.
Here’s a roundup of the key gambling stories to keep an eye on this week.
DraftKings Faces NCAA Lawsuit: Will They Change Their Language?
Recently, the NCAA initiated legal action against DraftKings, alleging that the operator has used the term “March Madness” and other trademarked phrases without authorization.
In response, DraftKings maintains that its usage of “March Madness” and similar expressions falls under fair use guidelines. As of now, the operator continues to employ the term, including phrases like “Sweet 16.”
In contrast, BetMGM has opted to eliminate such language, while other operators have chosen to refrain from using it entirely.
The NCAA has successfully compelled Kalshi, a prediction market operator, to remove comparable terminology. The question remains: will DraftKings adjust its strategy in light of the NCAA’s claims, or will it persist in contesting them?
Kalshi’s Ongoing Legal Challenges: Courts, States, and Deadlines
This week, Kalshi continues to face legal challenges in multiple states, with deadlines approaching and potential expansion into new areas.
Arizona Case: Federal vs. State Jurisdiction Conflict
Last week, a federal judge rejected Kalshi’s request for a temporary restraining order against Arizona. Concurrently, the court instructed Kalshi to clarify why the case should not be dismissed based on the Younger abstention doctrine, considering the ongoing state criminal proceedings.
On Friday, Kalshi presented its arguments, asserting that the timing of the charges falls under the “bad faith” exception. Arizona’s response is expected by March 27.
Nevada: Heightened Enforcement Risks
Following the Ninth Circuit’s denial of a federal stay last week, Nevada regulators have proceeded with enforcement actions, issuing a temporary restraining order that has compelled Kalshi to suspend its operations in the state.
While Kalshi may consider filing an emergency petition with the U.S. Supreme Court, this scenario seems unlikely. Additionally, gaming attorney Daniel Wallach has noted that Nevada could pursue criminal charges under existing laws, with operating unlicensed gambling classified as a felony, carrying penalties of up to $50,000 in fines and a maximum of 10 years in prison.
Florida: Rising Political Pressure
Florida is another state that may become involved in the broader legal conflict. Recently, during a CNBC interview, Governor Ron DeSantis raised concerns about whether prediction markets violate the Seminole Tribe’s gaming compact.
The governor’s remarks could prompt state regulators to take action against Kalshi or other prediction markets, given that the Seminole Tribe has exclusive rights to sports betting in the state.
Class Action Consolidation Deadline Approaches
Three class action lawsuits filed in the Southern District of New York are facing a consolidation deadline on March 24. These complaints allege that Kalshi operates as an unlicensed sportsbook and misled users regarding the functionality of its platform.
The question remains whether these three lawsuits, along with potentially similar cases, will be consolidated into a single action.
Legislative Developments: Scheduled Hearings and Key Deadlines
Maryland lawmakers are facing a crossover deadline on March 23. The House has swiftly advanced and passed a bill banning sweepstakes casinos, while a second measure has moved forward from committee.
The fate of the second bill, HB 1226, is uncertain as it awaits a floor vote, which could lead to the Senate receiving multiple sweepstakes-related measures.
In Maine, two separate bills are progressing along different paths, with one proposing to prohibit credit cards for deposits.