Kalshi bets on Neal Katyal in prediction market cases

By Mike Scarcella and David Thomas

Feb 26 (Reuters) - (Billable Hours is Reuters' weekly report on lawyers and money. Please send tips or suggestions to D.Thomas@thomsonreuters.com.)

Prediction-market operators are tapping high-powered lawyers in a wave of regulatory battles with U.S. states that want to shut down or restrict their fast‑growing event‑contracts businesses.

Neal Katyal, who leads law firm Milbank's U.S. Supreme Court practice, appeared for Kalshi this week in a lawsuit the company filed against Utah regulators. Katyal, who was acting U.S. solicitor general under President Barack Obama, is also representing Kalshi in similar cases in Nevada, Ohio, Maryland, Connecticut and Tennessee.

Katyal's appearance in the Utah case came days after he won last week's decision at the U.S. Supreme Court striking down President Donald Trump’s global tariffs. Katyal is also a lead attorney defending New Jersey cities in a lawsuit filed by the Trump administration over immigration policies.

Prediction markets, which analysts estimated handled $47 billion in trading volume in 2025, allow users to trade on the outcomes of real‑world events ranging from politics and economics to sports and culture. The platforms let people wager on how events will unfold using tradeable contracts.

Kalshi and rival prediction platforms Polymarket and Coinbase did not immediately respond to requests for comment about their legal efforts. Milbank declined to comment.

In mounting cases across the country, Kalshi, Polymarket and Coinbase are arguing that their markets fall under the exclusive jurisdiction of the federal Commodity Futures Trading Commission, not state gambling authorities.

Kalshi said in the Utah lawsuit and other cases that federal law preempts states from treating its event contracts as gambling. State regulators counter that prediction market operators like Kalshi are running unlicensed sports‑betting platforms.

Polymarket, which bills itself as the world's largest prediction market, has also brought lawsuits in several states. Its legal team includes Orin Snyder and Thomas Dupree Jr of Gibson, Dunn & Crutcher. Snyder is a go-to lawyer for technology companies, and Dupree is the co-leader of his firm's appellate and constitutional law practice.

Coinbase's legal team includes Sullivan & Cromwell's Jeffrey Wall, who was the U.S. solicitor general during the first Trump administration. He leads his firm's Supreme Court and appellate practice.

— Trade lawyers expect law firm committee to steer tariff refunds litigation

New claims are piling up at the U.S. Court of International Trade after the U.S. Supreme Court ruled Friday that President Donald Trump lacked authority to impose tariffs under a law meant for use in national emergencies.

More than 1,800 cases were pending before the high court's decision on Friday. Since then, FedEx, L'Oreal and more than 100 other companies have added to the crush of lawsuits, with many more expected in the coming weeks. Quinn Emanuel partner Dennis Hranitzky said his firm alone is planning to bring claims for hundreds of clients.

Law firms that already have a large share of refund cases at the Court of International Trade include Crowell & Moring, which has filed at least 150 cases, and Grunfeld, Desiderio, Lebowitz, Silverman & Klestadt, which has filed more than 300 tariff lawsuits.

Lawyers with pending cases told Reuters they expect the court to form a plaintiffs steering committee that includes firms like their own to advise a designated lead plaintiff and serve as a liaison to the court and the government for the thousands of other cases. Firms would volunteer to serve on a committee approved by the court, the attorneys said.

"We help them strategize," Nithya Nagarajan, a partner at Husch Blackwell whose firm is representing ALDI and Peloton Interactive, said of the process.

Plaintiffs steering committees are common in large multi-district cases related to legal claims such as product defects or consumer protection, and firms often vie to be appointed in hopes of reaping an outsized share of attorney fee awards.

Unlike in those cases, serving on a plaintiffs committee in the trade litigation would not confer a particular financial reward, trade lawyers told Reuters.

"It’s volunteering for extra work," said John Peterson, a partner at Neville Peterson who has been practicing trade law for 49 years.

Peterson said sitting on a steering committee keeps lawyers closer to the action and can give them greater influence. It can also convey prestige and recognition, said Nagarajan.

"It shows the respect your fellow practitioners have for you," Nagarajan said.

— Litigation funder Longford Capital sues to enforce $32.3 million arbitration award

U.S. litigation funding firm Longford Capital has asked a business court in Texas to confirm an arbitration award of more than $32 million it won against patent monetization company Arigna.

The dispute stems from a 2020 litigation‑funding arrangement involving Longford, Arigna and law firm Susman Godfrey in which Longford says it invested more than $38 million between 2020 and 2024 to finance Arigna's patent enforcement efforts and was entitled to a share of proceeds.

Longford said in its lawsuit on Feb. 19 that Arigna and related affiliates reached a $100 million global settlement in November 2023, which the arbitrator found to be “proceeds.” Longford alleges Arigna diverted most of the settlement to an affiliate’s Irish bank account and deposited only $5.53 million into Susman’s client trust account. Foley & Lardner represents Longford. The company that settled is not identified in court papers.

Longford had no immediate comment. Susman, which is not a defendant in the case, did not immediately respond to a request for comment.

Arigna has denied any wrongdoing, and said the dispute never should have been forced into arbitration in the first place. The company says it was not a party to the Longford-Susman Godfrey funding agreement.

Arigna has said that the $100 million settlement at issue involved not just Arigna but "numerous" other entities that were not represented by Susman and not funded by Longford. A lawyer for Arigna told Reuters that "Arigna remains confident that its position will ultimately prevail."

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