Kalshi, Robinhood Sued in South Carolina Over Alleged Gambling Violations
The prediction market platform Kalshi and the retail brokerage Robinhood are being sued in South Carolina for allegedly violating the state’s stringent anti-gambling laws, as reported by Law360. The lawsuit, filed by South Carolina Gambling Recovery LLC, seeks to recover gambling losses incurred by state residents who used the platforms’ services.
The complaint accuses Kalshi and Robinhood of operating a “prediction market” and offering sports betting to residents, activities strictly prohibited under state statutes. The case was recently moved to the U.S. District Court on October 8, after being originally filed in Oconee County Common Pleas Court in June.
Leveraging 18th-Century Law to Recoup Losses
The legal challenge is unique as it is anchored in the centuries-old British law known as the Statute of Anne (1710). This law permits a losing party to sue the winning party to recover funds lost through illegal gambling.
Furthermore, the Statute of Anne includes a contentious provision: if the losing party fails to sue within three months, any other person can file a claim against the winning party for four times the amount of the damages (plus costs).
The plaintiff, South Carolina Gambling Recovery LLC, is a Delaware-registered entity that states its purpose is to enforce South Carolina’s gambling statutes. The firm has already filed similar lawsuits earlier this year against daily fantasy sports (DFS) operators and sweepstakes casinos.
High-Stakes Precedent
The use of the Statute of Anne carries significant weight due to a successful historical precedent. A similar law was effectively used in a major lawsuit against the online poker giant PokerStars in Kentucky, which ultimately led to a $300 million settlement.
The lawsuit against Kalshi and Robinhood seeks to apply this powerful, archaic law to the modern financial and digital platforms. This action highlights the continued legal pressure facing prediction markets across the U.S., which often claim federal regulatory oversight under the Commodity Exchange Act (CEA) to preempt state gambling laws. However, state regulators and now private legal firms are pushing back, asserting that the underlying activity constitutes illegal wagering.
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