Adam Roarty is a journalist covering sports betting, regulation, and industry innovation for CasinoBeats. His coverage includes tax increases in the UK, covering breaking stories in the ever-evolving landscape of US betting such as the...
Read Full BioA lawsuit against Kalshi and Robinhood in South Carolina has been moved to federal court. South Carolina Gambling Recovery LLC filed the claim in the Oconee County Court of Common Pleas in June. However, at the defendants’ request, it was filed in the US District Court on October 8.
The original lawsuit seeks to recover gambling losses from users on the platforms based on the Statute of Anne, a 1710 British Law.
The Statute of Anne is an old British law that allows a losing party to sue a winning party to recover losses from illegal gambling. The lawsuit references the statute, noting, “And should the losing party fail to sue within three months, it authorizes anyone to bring a claim against the winning party for four times the amount of damages (and costs).”
A law based on the statute was previously cited in a successful lawsuit against PokerStars in Kentucky. The court initially ordered parent company Flutter to pay $870 million, but after petitioning, the operator agreed to pay a $300 million settlement.
The word “illegal” does not appear in the Kentucky Loss Recovery Act. Kentucky’s law also sets the threshold to sue at losing $5 within 24 hours.
Lawsuits Filed in Six States
Kalshi is facing a series of similar legal actions from groups named “Gambling Recovery LLC,” including the following states:
- Ohio
- Kentucky
- Georgia
- Massachusetts
- Illinois
The cases in Ohio, Massachusetts, and Illinois have also been moved to federal courts. Kalshi and Robinhood prefer to move the cases to federal courts as the platforms insist they are regulated at the federal level by the Commodity Futures Trading Commission (CFTC).
The legal battles for prediction markets show no signs of letting up. This week, Kalshi filed a counter-lawsuit in Ohio to prevent the state from enforcing its cease-and-desist order sent back in April.
In total, prediction markets are fighting 13 court cases challenging the legality of sports markets. Outside the court cases, other state authorities have confirmed they are investigating the markets, sending cease-and-desist letters, or warning operators about entering or collaborating with prediction market platforms.
Mick Bransfield has compiled a helpful guide detailing all the legal actions involving sports event contracts.
Anonymous Group of Lawyers Seeks ‘Gambling Recovery’
The lawsuits filed by Gambling Recovery LLC in six states are almost identical and seem to have been filed by the same company. However, each Gambling Recovery LLC is registered as its own entity.
South Carolina Gambling Recovery LLC also filed a lawsuit against DFS and sweepstakes casino operators earlier this year. In that lawsuit, it describes itself as “a company formed under the laws of Delaware to enforce South Carolina’s gambling laws.”
The other Gambling Recovery LLCs were also formed in Delaware, where laws mean they do not need to reveal their identity. Previous court filings say it is a “company created by several public-interest oriented lawyers.”
In addition to lawsuits filed against Kalshi, DFS, and sweepstakes casinos, complaints have also been filed against licensed gambling operators.
D.C. Gambling Recovery LLC filed a lawsuit against BetMGM, Caesars Sportsbook, DraftKings, Fanatics Sportsbook, and FanDuel earlier this year.
Lawsuit Says Sports Markets Equal Unregulated Betting
The lawsuits allege that Kalshi’s markets “do not differ materially—in form or function—from the offerings found in casinos, sportsbooks, and other traditional gambling establishments.”
It then adds, “Kalshi’s prediction market violates both state and federal law.” Due to this, under the Statute of Anne, gambling debts are therefore unenforceable.
When asked for comment, a Robinhood spokesperson told Casino Beats, “As we’ve previously shared, Robinhood’s event contracts are federally regulated by the CFTC and offered through Robinhood Derivatives, LLC, a CFTC-registered entity, allowing retail customers to access prediction markets in a safe, compliant, and regulated manner. We intend to defend ourselves against these claims.”
