Case 2:25-cv-00575-APG-BNW Document 45 Filed 04/09/25 Page 15 of 17
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A credible threat of imminent prosecution for a state violation that conflicts with federal law can establish a likelihood of irreparable harm. See Morales v. Trans World Airlines, Inc. , 504 U.S. 374, 381 (1992) (“When enforcement actions are imminent . . . there is no adequate remedy at law.”); Valle del Sol Inc. v. Whiting , 732 F.3d 1006, 1029 (9th Cir. 2013). Kalshi thus faces a “Hobson’s choice”: if it does not comply with the defendants’ demand to cease it faces civil and criminal liability, but if it does comply it will incur substantial economic and reputational harm as well as the potential existential threat of the CFTC taking action against it for violating the CFTC’s Core Principles if Kalshi disrupts contracts or geographically limits who can enter contracts on what is supposed to be a national exchange. Am. Trucking Ass’ns, Inc. v. City of Los Angeles , 559 F.3d 1046, 1057 (9th Cir. 2009); see also ECF No. 18-1. Kalshi presents credible evidence that even if it could implement geofencing at great expense, it could not do so immediately as the defendants demanded. And, as discussed at the injunction hearing, there are questions about whether Kalshi could recover monetary damages against the defendants in either state or federal court and, even if it could, whether those damages would be capped such that Kalshi could not meaningfully be compensated for the millions of dollars it asserts it would have to spend to geofence out Nevada market participants. IV. Balance of Hardships The balance of hardships tips in Kalshi’s favor given that it is facing substantial monetary expenditures, reputational damage, or civil and criminal prosecution based on the defendants’ demands that the defendants likely cannot make because they are preempted. In contrast, the defendants are not facing much harm in the short term because I believe they are preempted. And if I am wrong, the defendants can prosecute Kalshi later for its conduct. Although the defendants suggested at the hearing that Nevadans who enter into these contracts may be
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