After a Washington state man lost more than $308,000 on a sports event bet on Kalshi, he sued the platform for illegal gambling under state law and demanded $580,000, citing the case that "wins do not offset losses on a game-by-game basis." (Preliminary summary: Many states in the United States block Kalshi, and the CFTC backs against the wind: the prediction market regulatory battle begins) (Background supplement: CFTC is trying to force the court! Kalshi will have 30 days to resume trading nationwide, otherwise it will provide written instructions) Washington state resident Scott Bright bet on sports events in the prediction market Kalshi, and after losing more than $308,000 in two months, he decided to seek compensation from the court for $580,000, nearly twice the loss. The indictment contends that according to the 1950 Heitfeld case of the Washington State Supreme Court, gambling losses must be calculated on a game-by-game basis, and winning games cannot offset losses. The total amount lost for each game is $580,000. Why should he sue Kalshi? The indictment pointed out that Washington state has banned online gambling in 2006, and state law also allows people who lose money in illegal gambling to recover losses from winning bookmakers or gambling operators. The indictment also quoted the Ninth Circuit Court of Appeals’ ruling in a Nevada case in August: “Betting on sports, even if it is called by another name, is still gambling.” Timing is key. The Washington State Attorney General filed a lawsuit against Kalshi in the same court on March 27. Bright made his first deposit 82 days later. The state court issued a preliminary injunction on July 17, and an amended version on August 12 required Kalshi to stop offering sports and other categories of contracts in Washington. The geo-blocking deadline was set for August 19. Bright's last deposit was on August 14, well before the deadline, so he could still place bets after the ban was lifted. Kalshi’s rulebook revealed that one of its affiliated companies would place orders on the platform to provide liquidity for the purpose of making a profit. The indictment therefore claimed that, based on the plaintiff’s knowledge and belief, this related enterprise may have taken over a considerable proportion of his rival’s orders. If true, Kalshi is not a neutral platform but a winning bookmaker. But the indictment also acknowledges that only Kalshi knew who the opponent was. How does Kalshi respond? Kalshi argued that Bright was buying and selling event contracts, not gambling. It has been a designated contract market approved by the U.S. Commodity Futures Trading Commission (CFTC) since 2020, and the contracts are regulated by the federal Commodity Exchange Act. Kalshi also said that fees were collected regardless of winning or losing, that the money Bright lost went to the counterparty, not Kalshi, and the indictment does not allege that Kalshi or his parent company was the counterparty to any of his positions. Kalshi also emphasized that the indictment did not allege that anyone misled him about how the platform worked, how much it charged, or the risk of losing money on his positions. Kalshi also cited the Illinois federal district court's ruling in the Lavery case in July, in which the court rejected similar claims for gambling losses on the grounds that it only awarded total losses and did not list the amount lost in each game or the trading time. Kalshi also asked the court to put the case on hold until the U.S. Supreme Court takes up the New Jersey case, arguing that Supreme Court review would resolve or simplify each request. Kalshi also pointed out that the Washington state government’s lawsuit in state court was originally seeking to recover the same money on behalf of residents, including Bright. What happens next? The motion to dismiss is scheduled for Nov. 27, and Kalshi requested oral arguments. In terms of the overall situation, the Federal Circuit was divided: the Third Circuit ruled in favor of Kalshi, while the Ninth and Sixth Circuits ruled against Kalshi. New Jersey has petitioned the Supreme Court for certiorari (Docket No. 26-299). Kalshi's deadline to plead in the case has been extended to December 7, and the Supreme Court will have to wait at least until then to take up the case. Related reports The Ninth Circuit slaps the CFTC in the face! Kalshi loses Nevada case, escalating prediction market jurisdiction battle Kalshi loses case! Ohio and Tennessee successfully appealed that prediction market contracts do not count as futures exchanges, and state-level encirclement and suppression escalated! Kalshi hit with 14 criminal charges in Utah, CFTC fights back against states! The prediction market contract will become a derivative, and the CFTC will slap Kalshi on the gambling charges! Dozens of new products were not declared in compliance with regulations. "A prediction market user lost US$300,000 in gambling, and sued Kalshi for illegal gambling and demanded compensation of US$580,000." This article was first published on BlockTempo "Dongqu Dongzhu - the most influential blockchain news media".