Kalshi, a prediction market firm, has initiated a lawsuit against the Iowa state regulators, citing a considerable chance of facing enforcement actions regarding its sports event contracts.

On Wednesday, Kalshi brought the case against Iowa Attorney General Brenna Bird, along with the Iowa Racing and Gaming Commission, in federal court. The company claims that there is a substantial risk that Bird will attempt to block its event contracts.

According to Kalshi, a representative met with Bird under the pretense of discussing a tax bill in the Iowa legislature. However, they were met by a panel of attorneys, including Iowa’s Solicitor General, who questioned whether Kalshi’s federally regulated activities were in violation of Iowa state law.

Kalshi asserts that Bird mentioned she had been auditing the company for a considerable time. Afterward, Kalshi reached out to Bird’s office for reassurances that no enforcement actions would be pursued, but received no such confirmation.

The lawsuit marks a continuation of Kalshi’s efforts to clarify its operations amid varying interpretations of the law by different regulatory bodies across the United States. The primary defense of Kalshi emphasizes that federal law supersedes state regulations, positioning it under the exclusive jurisdiction of the Commodity Futures Trading Commission (CFTC).

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Many state authorities argue that Kalshi’s contracts constitute gambling and should adhere to state laws requiring proper licensing. Federal courts have issued mixed rulings on similar cases in the past months.

Kalshi’s recent legal moves underscore the growing tension between state regulations and federal laws governing prediction markets.