The business of betting on the future is now itself the subject of a legal gamble.
Prediction-market platform Kalshi has enlisted former U.S. solicitor general Neal Katyal as it battles state regulators determined to rein in its fast-expanding event-contracts model. Katyal, now a leading Supreme Court advocate at Milbank, appeared this week in litigation challenging Utah authorities, part of a broader, multi-state clash stretching from Nevada to Tennessee.
The timing is notable. Katyal recently secured a major victory at the Supreme Court of the United States, where justices struck down sweeping global tariffs imposed by former President Donald Trump. That decision has triggered a surge of new refund claims from importers, transforming the U.S. Court of International Trade into one of the busiest courtrooms in the country.
But for Kalshi and its rivals, the fight is less about tariffs and more about turf.
Federal Regulator or State Gambling Cop?
Prediction markets allow users to buy and sell contracts tied to real-world outcomes — elections, economic data, even sports results. Analysts estimate these platforms processed roughly $47 billion in trades last year, underscoring how quickly the once-niche industry has scaled.
Kalshi argues its contracts fall under the exclusive oversight of the federal Commodity Futures Trading Commission. States see something else: unlicensed betting operations dressed in financial garb.
Rival platform Polymarket has assembled its own heavy artillery, including prominent appellate lawyers from Gibson, Dunn & Crutcher. Coinbase, which has also ventured into event-based products, counts a former U.S. solicitor general among its legal ranks as well.
The cases are multiplying. The core question remains deceptively simple: when does a wager become a financial instrument?
After the Tariff Shock, a Flood of Claims
Meanwhile, fallout from the Supreme Court’s tariff ruling is ricocheting through trade law circles. More than 1,800 cases were already pending before the decision; since then, major companies including FedEx and L’Oreal have joined the rush, seeking refunds.
Firms like Crowell & Moring and Grunfeld, Desiderio, Lebowitz, Silverman & Klestadt are handling hundreds of claims. Attorneys expect the trade court to create a plaintiffs’ steering committee — a coordinating body that can streamline strategy and act as liaison to the government.
Unlike sprawling product-liability cases, there’s no promise of a fee windfall for committee members. The incentive is subtler: influence, proximity to the action, and professional prestige.
A $32 Million Funding Fight
Elsewhere in the legal-finance ecosystem, litigation funder Longford Capital has asked a Texas business court to confirm a $32.3 million arbitration award against patent monetization firm Arigna.
Longford says it poured more than $38 million into patent enforcement efforts under a 2020 funding deal involving Arigna and law firm Susman Godfrey. When a global settlement worth $100 million was reached, Longford contends, the proceeds were diverted in ways that shortchanged its contractual share.
Arigna disputes that characterization and maintains it should never have been bound by the arbitration in the first place. The company argues the settlement involved multiple entities beyond the scope of Longford’s agreement.
Across these disputes — from prediction markets to tariff refunds to patent funding — the common thread is leverage. Financial innovation has blurred traditional regulatory lines, and now courts are being asked to redraw them. For the lawyers involved, it’s a season of consequential arguments. For the companies, the stakes are nothing short of existential.
