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points by stickfigure 5 days ago | 0 comments

> They know what they are doing is illegal

This is a bad take. What they are doing is quite obviously legal right now. Federal law trumps state law and the feds have an opinion, despite being weird and controversial.

There are a number of ongoing legal battles about the federal laws but until they work their way through the courts, it's "legal". Also, it could all get resolved with a new presidential administration in two years. This is the correct solution.

We shouldn't cheer for personal prosecutions over definitionally legal activity. Nothing good will come of it. See also: Sending mifepristone across state lines, or traveling out of state for abortions.

[–] bwestergard 5 days ago

"What they are doing is quite obviously legal right now. Federal law trumps state law and the feds have an opinion..."

Federal law does not categorically trump state law.

https://en.wikipedia.org/wiki/Federal_preemption

Whether pre-emption applies in this case depends on whether the courts accept Kalshi/Polymarket's claim that they operate a futures trading platform, not a gambling platform. If and only if that claim is accepted is there a pre-emption argument, and only then would the opinion of the Commodity Futures Trading Commission be relevant.

[–] stickfigure 5 days ago

And while that is winding through the legal system, courts have decided that Kalshi/Polymarket can continue to operate. That might change in the future, but it is the present reality.

As long as the business is legal to operate, there is no justification for criminally prosecuting the people engaged in that business.

[–] bwestergard 5 days ago

That courts have not ordered them to stop operating does not mean that what they are doing is legal. They could face additional counts for their behavior while the case is pending.

"As long as the business is legal to operate, there is no justification for criminally prosecuting the people engaged in that business."

You are begging the question: assuming that the business is legal to operate in the state of Utah. You keep presenting Kalshi's arguments as though they enjoy some presumption of legality prior to a ruling.

[–] lesuorac 5 days ago

It's a criminal case, don't they have a presumption of legality then?

[–] Dylan16807 5 days ago

Presumption of legality pending trial is rather different from "quite obviously legal[emphasis in original]" or "definitionally legal".

"until they work their way through the courts, it's "legal"" is a much better phrasing and if the comment had stuck to that it probably wouldn't be downvoted.

[–] ceejayoz 5 days ago

> What they are doing is quite obviously legal right now. Federal law trumps state law…

No. There's no "states must permit gambling" Federal law for state bans to conflict with currently; states are free to ban it.

https://en.wikipedia.org/wiki/Gambling_in_the_United_States

"While gambling is legal under U.S. federal law, there are significant restrictions pertaining to interstate and online gambling, as each state is free to regulate or prohibit the practice within its borders."

[–] cogman10 5 days ago

While I know of a few cases where federal law can force a state to have looser restrictions (for example, the second amendment), it's pretty uncommon. Usually if a state wants to ban something, it can ban it and federal law can't stop such a ban without a pretty strong constitutional justification.

[–] ceejayoz 5 days ago

> While I know of a few cases where federal law can force a state to have looser restrictions (for example, the second amendment)…

The Second Amendment isn't even really Federal law, nor is the rest of the Constitution. It's the supreme law that sits above Federal/state law and constrains what Federal/state laws can do.

(And the Tenth Amendment protects state laws significantly from Federal laws, where applicable.)

[–] stickfigure 5 days ago

If it were that simple then these markets would have been shut down already.

Matt Levine has gone into great detail about the legal chicanery that brought us here, but it summarizes as "it's not gambling, it's futures trading".

This seems like nonsense to you and me (and Matt Levine), but our opinions are irrelevant here. The courts' opinions are, and so far they've been coming down on the side of the prediction markets. Mostly.

So by definition - as weird as it is - it's legal. So far.

[–] monknomo 5 days ago

But we're talking about legislator's opinions here. They make the law. A good way to influence the courts, as a legislator, is to write a law.

Even if you are a state legislator, and federal courts are mixed, you should write the law to raise the issue salience and get the federal law tweak.

Courts really are not the end-all-be-all when we're talking about legislators making laws, that's silly.

[–] ceejayoz 5 days ago

> If it were that simple then these markets would have been shut down already.

Sure, just like storing a bunch of classified docs in a Mar-a-Lago bathroom was.

You are mixing up "currently getting away with it" for legal.

[–] stickfigure 5 days ago

You're mixing up "what is" with "what should be".

[–] cogman10 5 days ago

People are still selling fentanyl without a prescription. Is that legal?

Courts move slow, especially when the party being targeted has a lot of money. Them allowing Kalshi to operate isn't an endorsement, it just means they don't see what Kalshi is doing as a significant harm. The injunction to stop them from operating in Utah is still winding it's way through appeals.

Whether or not what they are doing is legal is not determined until they either settle, Utah drops the case, or the trail and appeals process determines that they are not guilty.

[–] stickfigure 5 days ago

> People are still selling fentanyl without a prescription. Is that legal?

Obviously not. You know how you can tell? Police will stop you from doing it.

[–] cogman10 5 days ago

> You know how you can tell? Police will stop you from doing it.

Police will stop you from recording them, is that illegal?

[–] ceejayoz 5 days ago

> Police will stop you from doing it.

"Kalshi and its co-founders face felony charges" would seem to describe that process, yes? The same first step a fentanyl dealer would encounter?

Swap out "selling fentanyl" for widely tolerated but often still illegal jaywalking if you like.

[–] tracerbulletx 5 days ago

Isn't it way more complicated than that? A state can obviously make things illegal in that state that aren't illegal nationally, they do it all the time. There would have to be a positively conflicting law to be a debate. (like with drug laws) Normally going in the other direction. Pretty sure you'd need a constitutional amendment to bind a state from doing something. Like in the case of drugs where federal law is often more strict, there's a whole body of case law around that. They made a commerce clause argument, and there's a doctrine they can't force the states to act to enforce a federal law, but also the states can't countermand the federal law, there's a whole history of courts dealing with the interactions.

[–] Tangurena2 5 days ago

> there's a doctrine they can't force the states to act to enforce a federal law, but also the states can't countermand the federal law, there's a whole history of courts dealing with the interactions.

The Fugitive Slave Acts were two of these conflicts. The first one overruled any state that offered sanctuary while also making it a federal crime to assist runaways. The second one aggravated tensions between slave states and the rest of America. Under the Fugitive Slave Act of 1850, it was not legal for a suspected runaway slave to deny being the slave described in the paperwork. States were required to assist slave catchers. Also, suspected runaway slaves were not permitted any sort of trial. It legalized kidnapping any black person who vaguely fit the description on the paperwork.

https://en.wikipedia.org/wiki/Fugitive_Slave_Act_of_1850

Prior to the Commodities Futures Modernization Act of 2000, some states regulated credit default swaps as insurance products while some state's statutes said that CDS were gambling (and outlawed it completely). The CFMA overruled the states that had outlawed CDS. This was one of the major causes of the 2007/2008 financial meltdown.

https://en.wikipedia.org/wiki/Commodity_Futures_Modernizatio...