Case 3:25-cv-06162-JSC Document 35 Filed 09/04/25 Page 21 of 34
on the buying public.’” Time Warner Cable, Inc. v. DIRECTV, Inc. , 497 F.3d 144, 153 (2d Cir.
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2007) (quoting Coca-Cola Co. v. Tropicana Prods., Inc. , 690 F.2d 312, 317 (2d Cir. 1982));
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Suzie’s Brewery , 519 F. Supp. 3d at 846; see 15 U.S.C. § 1116(a) (“A plaintiff seeking any such
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injunction shall be entitled to a rebuttable presumption of irreparable harm . . . upon a finding of
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likelihood of success on the merits for a violation identified in this subsection in the case of a
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motion for a preliminary injunction . . . .”). “Only an unambiguous message, however, can be
literally false.” Suzie’s Brewery , 519 F. Supp. 3d at 846 (citing Time Warner , 497 F.3d at 158).
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“Therefore, if the language or graphic is susceptible to more than one reasonable interpretation,
the advertisement cannot be literally false.” Id .
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Kalshi published an advertisement on January 23, 2025, with the headline that asserted:
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“Sports Betting Legal in all 50 States on Kalshi,” which included the statement: “Breaking News:
You can now bet on sports in all 50 states with Kalshi.” Gouker article, supra page 2. These
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statements are not susceptible to more than one reasonable interpretation; the only reasonable
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interpretation is that Kalshi offers “sports betting” and that sports betting is “legal in all 50 states.”
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These statements are literally false. First, states either criminally prohibit or strictly regulate sports
betting activity. See e.g. , Cal. Penal Code § 337a(1). Thus, on its face, sports betting is not legal
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in all fifty states and is not legal in California. Second, at the federal level, IGRA and the Wire
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Act, 18 U.S.C. § 1084, prevent such conduct. Kalshi’s assertion that its “sports betting” is “legal
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in all 50 states” relies on the presumed preemptive force of the CEA, a caveat that cannot be
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reasonably ascertained from the plain language of the advertisement. Significantly, Kalshi’s
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contracts are not legal in all fifty states because, as shown above, Kalshi’s contracts do not comply
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with the CEA, as they are presumptively contrary to the public interest and, pursuant to 17 C.F.R.
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§ 40.11, Kalshi was prohibited from offering its gaming contracts to consumers.
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Even if Kalshi’s advertisements were not facially false, they are false by necessary
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implication. Under “the false-by-necessary-implication doctrine, ‘[i]f the words or images,
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considered in context, necessarily imply a false message, the advertisement is literally false[,] and
no extrinsic evidence of consumer confusion is required.’” Suzie’s Brewery , 519 F. Supp. 3d at
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12 NOTICE OF MOTION AND MEMORANDUM OF POINTS AND AUTHORITIES [ Case No.: 25-cv-06162-JSC]
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