GEORGIA GAMBLING RECOVERY LLC v. KALSHI INC et al

IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF GEORGIA
COLUMBUS DIVISION
GEORGIA GAMBLING RECOVERY LLC,
Plaintiff,
vs.
KALSHI INC., et al.,
Defendants.
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CASE NO. 4:25-cv-310 (CDL)
O R D E R
Plaintiff 	filed 	this 	action 	in 	the 	State 	Court 	of 	Muscogee
County 	against 	multiple 	Defendants, 	asserting 	claims 	under
O.C.G.A. § 13-8-3. 	Defendants removed the action to this Court on
the 	ground 	that 	the 	action 	presents 	a 	substantial 	and 	disputed
question 	of 	federal 	law 	such 	that 	jurisdiction 	exists 	under 	28
U.S.C. 	§ 	1331. 	Defendants 	alternatively 	assert 	that 	removal 	is
proper 	under 	28 	U.S.C. 	§ 	1332 	and 	the 	Class 	Action 	Fairness 	Act.
Plaintiff 	responds 	that 	this 	Court 	lacks 	subject 	matter
jurisdiction, and it filed a motion to remand. 	As discussed below,
the Court denies the motion (ECF No. 35).
FACTUAL BACKGROUND
Plaintiff 	Georgia 	Gambling 	Recovery 	LLC 	brought 	this 	action
against 	multiple 	“prediction 	markets” 	and 	“market 	makers” 	to
recover 	gambling 	losses 	allegedly 	suffered 	by 	Georgia 	residents.
Plaintiff 	alleges 	that 	the 	prediction 	markets 	permit 	Georgia
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residents 	to 	buy 	and 	sell 	“event 	contracts”, 	which 	are 	defined
under federal law. 	Compl. ¶¶ 2, 31, ECF No. 1-1. 	Purchasing these
event 	contracts 	allows 	Georgia 	residents 	to 	“place 	bets” 	on 	the
occurrence or non-occurrence of specified future events. 	Id. ¶¶ 2,
28. 	Plaintiff 	further 	alleges 	that 	prediction 	markets 	depend 	on
liquidity 	supplied 	by 	market 	makers. 	Id. 	¶ 	3. 	In 	exchange 	for
providing funds to the prediction markets, market makers allegedly
receive “kickbacks” from the prediction markets. 	Id. 	Thus, when
Georgia residents purchase event contracts on a prediction market,
they 	“almost 	always 	face 	off 	against 	money 	provided 	by 	a 	money
market.” 	Id. ¶ 29.
Plaintiff 	alleges 	that 	Defendants 	Kalshi, 	Robinhood, 	and
Webull all operate prediction markets that are available to users
nationwide, 	including 	residents 	of 	Georgia.1 	Id. 	¶¶ 	32, 	38-39.
Kalshi, 	a 	federally 	designated 	commodities 	exchange, 	sources 	the
event contracts offered on the Robinhood and Webull platforms, and
Robinhood and Webull share in Kalshi’s transaction fees each time
an event contract is purchased through their platforms. 	Id. ¶¶ 9,
38-39. 	Defendant 	Susquehanna, 	along 	with 	one 	of 	the 	Kalshi
1 “Kalshi” includes Defendants Kalshi Inc., KalshiEX LLC, Kalshi Klear
Inc., 	Kalshi 	Klear 	LLC, 	and 	Kalshi 	Trading 	LLC. 	“Robinhood” 	includes
Defendants 	Robinhood 	Markets, 	Inc. 	and 	Robinhood 	Derivatives, 	LLC.
Defendant “Webull” is Webull Corporation.
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entities, 	are 	“market 	makers” 	that 	“provide 	liquidity 	by 	buying
and selling event contracts.”2 	Id. ¶¶ 3, 50-52.
Plaintiff 	alleges 	that 	these 	prediction 	markets 	and 	money
markets constitute illegal gambling under Georgia law. 	Id. ¶ 53.
Plaintiff maintains that Defendants have engaged in these illegal
gambling operations for years in Georgia, resulting in “thousands
of 	individuals 	within 	Georgia” 	losing 	“tens 	of 	millions 	of
dollars.” 	Id. 	¶¶ 	6, 	66. 	Plaintiff 	further 	alleges 	that
Defendants’ 	offerings 	of 	event 	contracts 	“are 	also 	prohibited
under 	federal 	law,” 	asserting 	violations 	of 	the 	Interstate 	Wire
Act 	of 	1961, 	18 	U.S.C. 	§ 1084. 	Id. 	¶¶ 	54-56. 	Based 	on 	these
allegations, Plaintiff brought this action under O.C.G.A. § 13-8-
3 against multiple Defendants, seeking to recover gambling losses
incurred 	by 	Georgia 	residents. 	Kalshi, 	Webull, 	and 	Susquehanna
filed a notice of removal on October 2, 2025. 	Robinhood then filed
a 	notice 	of 	removal 	on 	October 	7, 	2025, 	to 	which 	all 	Defendants
consented. 	Plaintiff timely filed a motion to remand.
DISCUSSION
An 	action 	can 	only 	be 	removed 	from 	state 	court 	to 	federal
court 	if 	the 	action 	could 	have 	been 	brought 	in 	federal 	court 	in
the 	first 	place—that 	is, 	this 	Court 	must 	have 	subject 	matter
jurisdiction. 	28 	U.S.C. 	§ 	1441(a). 	All 	Defendants 	assert 	that
2 “Susquehanna” is Susquehanna International Group, LLP and Susquehanna
Government Products, LLLP.
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this 	Court 	has 	subject 	matter 	jurisdiction 	based 	on 	both 	federal
question 	jurisdiction 	and 	under 	the 	Class 	Action 	Fairness 	Act
(“CAFA”), 	28 	U.S.C. 	§ 	1332(d). 	Additionally, 	Kalshi 	argues 	that
this 	Court 	may 	exercise 	diversity 	jurisdiction 	over 	this 	action.
Plaintiff 	argues 	that 	the 	Court 	lacks 	federal 	question
jurisdiction 	because 	(1) 	no 	federal 	question 	appears 	on 	the 	face
of 	Plaintiff’s 	complaint, 	(2) 	this 	action 	does 	not 	raise 	a
substantial 	and 	actually 	disputed 	federal 	question, 	(3) 	this
action 	is 	not 	a 	“class 	action,” 	and 	(4) 	complete 	diversity 	does
not 	exist. 	For 	the 	following 	reasons, 	the 	Court 	finds 	that 	the
Court 	has 	federal 	question 	jurisdiction. 	Therefore, 	addressing
Defendants’ other bases for jurisdiction is unnecessary.
Defendants 	argue 	that 	this 	Court 	has 	federal 	question
jurisdiction 	under 	28 	U.S.C. 	§ 	1331 	because 	resolution 	of
Plaintiff’s 	state 	law 	claim 	necessarily 	raises 	a 	substantial 	and
actually 	disputed 	issue 	of 	federal 	law. 	No 	one 	disputes 	that
“district 	courts 	shall 	have 	original 	jurisdiction 	of 	all 	civil
actions 	arising 	under 	the 	Constitution, 	laws, 	or 	treaties 	of 	the
United 	States.” 	28 	U.S.C. 	§ 	1331. 	Typically, 	federal-question
jurisdiction 	“is 	invoked 	by 	. 	. 	. 	plaintiffs 	pleading 	a 	cause 	of
action created by federal law.” 	Grable & Sons Metal Prods., Inc.
v. Darue Eng’g & Mfg., 545 U.S. 308, 312 (2005). 	But “in certain
cases federal-question jurisdiction will lie over state-law claims
that implicate significant federal issues.” 	Id. 	“Th[is] doctrine
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captures 	the 	commonsense 	notion 	that 	a 	federal 	court 	ought 	to 	be
able 	to 	hear 	claims 	recognized 	under 	state 	law 	that 	nonetheless
turn 	on 	substantial 	questions 	of 	federal 	law.” 	Id. 	Thus, 	when
assessing 	federal 	issues 	embedded 	in 	state 	law 	claims, 	the 	Court
will 	assess 	whether 	“a 	state-law 	claim 	necessarily 	raise[s] 	a
stated 	federal 	issue, 	actually 	disputed 	and 	substantial, 	which 	a
federal forum may entertain without disturbing any congressionally
approved balance of federal and state judicial responsibilities.”
Id. 	at 	314. 	Generally, 	this 	determination 	is 	“based 	only 	on 	the
allegations in the plaintiff’s ‘well-pleaded complaint’—not on any
issue 	the 	defendant 	may 	raise.” 	Royal 	Canin 	U.S.A., 	Inc. 	v.
Wullschleger, 604 U.S. 22, 26 (2025) (quoting Franchise Tax Bd. of
Cal. 	v. 	Constr. 	Laborers 	Vacation 	Tr. 	for 	S. 	Cal., 	463 	U.S. 	1, 	9
(1983)). 	Ultimately, 	federal 	question 	jurisdiction 	exists 	if 	“a
well-pleaded complaint establishes . . . that the plaintiff’s right
to 	relief 	necessarily 	depends 	on 	resolution 	of 	a 	substantial
question of federal law.” 	Franchise Tax Bd. of Cal., 463 U.S. at
27-28.
Plaintiff 	here 	does 	not 	assert 	a 	cause 	of 	action 	based
directly 	on 	federal 	law. 	Its 	claim 	rests 	upon 	a 	Georgia 	statute
that 	arguably 	allows 	recovery 	of 	illegal 	gambling 	losses. 	But
determining 	whether 	the 	event 	contracts 	here 	are 	illegal
necessarily 	requires 	an 	examination 	of 	federal 	law 	and 	its
potential preemptive effect on these contracts. 	Plaintiff argues
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that 	Defendants’ 	federal 	preemption 	argument 	is 	an 	affirmative
defense 	and 	cannot 	be 	considered 	in 	determining 	whether 	federal
question 	jurisdiction 	exists. 	Plaintiff 	further 	maintains 	that
for 	this 	federal 	question 	to 	support 	federal 	question
jurisdiction, it must be an essential element of Plaintiff’s claim.
Plaintiff argues that “illegality” is not an essential element of
an action brought pursuant to O.C.G.A. § 13-8-3. 	Plaintiff over-
simplifies the nature of federal question jurisdiction and ignores
the plain meaning of the Georgia statute upon which it relies.
O.C.G.A. § 13-8-3 provides that all “[g]ambling contracts are
void,” 	and 	authorizes 	“any 	person” 	to 	recover 	“[m]oney 	paid 	or
property 	delivered 	upon 	a 	gambling 	consideration” 	within 	four
years 	of 	the 	gambling 	loss. 	The 	Georgia 	Supreme 	Court 	has
explained 	that 	the 	statute 	reflects 	the 	public 	policy 	“that 	the
winner shall not be protected in his unlawful gains, and that the
loser, though party to an illegal wager, may sue and recover back
the 	money.” 	Hardin 	v. 	NBC 	Universal, 	Inc. 	660 	S.E.2d 	374, 	375
(Ga. 	2008) 	(quoting 	Dyer 	v. 	Benson, 	69 	Ga. 	609, 	610 	(Ga. 	1882)).
To state a claim under O.C.G.A. § 13-8-3, a plaintiff “must allege
that 	a 	‘gambling 	contract,’ 	which 	was 	supported 	by 	a 	‘gambling
consideration,’ existed between the parties.” 	Hardin, 660 S.E. 2d
at 375.
Georgia courts have further recognized, however, that whether
a 	gambling 	contract 	is 	void 	under 	O.C.G.A. 	§ 	13-8-3 	depends 	on
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whether 	the 	contract 	is 	unlawful 	under 	the 	law 	governing 	its
validity. 	In 	Talley 	v. 	Mathis, 	453 	S.E.2d 	704 	(Ga. 	1995), 	for
example, the Georgia Supreme Court held that O.C.G.A. § 13-8-3 did
not void a Georgia contract relating to the purchase of a Kentucky
lottery 	ticket 	because 	the 	lottery 	was 	lawful 	where 	the 	contract
was 	formed. 	The 	Court 	reasoned 	that 	“the 	lottery 	was 	legal 	in
Kentucky 	and 	the 	purchase 	by 	a 	Georgia 	resident 	of 	a 	ticket 	in
that lottery would not necessarily be an immoral or illegal act.”
Id. 	at 	705. 	And 	when 	contracts 	are 	not 	“contrary 	to 	law, 	the
courts 	are 	bound 	to 	enforce 	them 	as 	made.” 	Id. 	at 	706 	(quoting
Cauthen v. The Central Ga. Bank, 69 Ga. 733(3) (Ga. 1882)).
Similar 	to 	Talley, 	whether 	the 	challenged 	event 	contracts
here 	are 	unlawful 	gambling 	contracts 	cannot 	be 	determined 	by
reference to Georgia law alone. 	Therefore, Plaintiff’s ability to
obtain 	relief 	depends 	on 	whether 	the 	challenged 	event 	contracts
are unlawful under the law governing their validity.
Congress, 	through 	the 	Commodities 	Exchange 	Act 	(“CEA”),
vested 	the 	Commodity 	Futures 	Trading 	Commission 	(“CFTC”) 	with
“exclusive 	jurisdiction” 	over 	“transactions 	involving 	swaps 	or
contracts 	of 	sale 	of 	a 	commodity 	for 	future 	delivery” 	traded 	on
CFTC-designated exchanges. 	7 U.S.C. § 2(a)(1)(A). 	The CEA defines
“swaps” 	and 	“event 	contracts” 	to 	include 	agreements 	whose 	value
depends on the occurrence or nonoccurrence of future events. 	Id.
§§ 	1a(47)(A)(ii); 	7a-2(5)(C)(i). 	The 	CFTC 	is 	further 	authorized
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to 	determine 	whether 	event 	contracts 	listed 	on 	CFTC-designated
exchanges 	are 	“contrary 	to 	the 	public 	interest” 	including
contracts 	involving 	“activity 	that 	is 	unlawful 	under 	any 	Federal
or State law” or “gaming”. 	Id. § 7a-2(5)(C)(i).
Plaintiff 	alleges 	that 	Kalshi 	is 	a 	CFTC-designated
commodities 	exchange 	that 	offers 	event 	contracts 	on 	its 	own
platform 	and 	through 	Robinhood 	and 	Webull. 	Compl. 	¶¶ 	31-32; 	38-
39. 	As 	a 	result, 	whether 	the 	contracts 	at 	issue 	are 	unlawful
gambling 	contracts—or 	instead 	federally 	authorized 	event
contracts—cannot 	be 	resolved 	by 	reference 	to 	Georgia 	law 	alone.
Thus, Plaintiff’s ability to sustain a claim upon which relief may
be 	granted 	necessarily 	depends 	on 	the 	interpretation 	and
application 	of 	the 	CEA 	and 	the 	scope 	of 	the 	CFTC’s 	exclusive
jurisdiction.3
The 	Supreme 	Court’s 	decision 	in 	Grable 	provides 	guidance
here. 	In Grable, the plaintiff’s ability to recover under a state-
law quiet title action depended on whether the plaintiff complied
with a federal tax-notice statute. 	545 U.S. at 315. 	As in Grable,
the 	resolution 	of 	whether 	the 	event 	contracts 	are 	governed
exclusively 	by 	the 	CEA—and 	whether 	federal 	law 	preempts 	the
application 	of 	Georgia 	law 	to 	those 	contracts—presents 	a 	“nearly
3 In addition, Plaintiff’s Complaint expressly alleges that Defendants’
event 	contract 	offerings 	violate 	the 	Interstate 	Wire 	Act 	of 	1961, 	18
U.S.C. § 1084. 	Compl. ¶¶ 54-56. 	These allegations further confirm that
resolution of Plaintiff’s claim necessarily requires interpretation and
application of federal law.
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‘pure issue of law’” that will likely be “dispositive of the case”
if Defendants’ position ultimately prevails. 	Empire Healthchoice
Assur., 	Inc. 	v. 	McVeigh, 	547 	U.S. 	677, 	700 	(2006) 	(quoting 	R.
Fallon, D. Meltzer, & D. Shapiro, Hart and Wechsler’s The Federal
Courts 	and 	the 	Federal 	System 	65 	(2005 	Supp.)). 	Further,
Plaintiff’s 	claim 	could 	conflict 	with 	the 	action 	of 	a 	federal
agency, which has an interest in a federal forum adjudicating that
federal 	agency’s 	authority 	under 	federal 	law. 	Id.; 	see 	also
Grable, 545 U.S. at 315 (“The Government . . . has a direct interest
in 	the 	availability 	of 	a 	federal 	forum 	to 	vindicate 	its 	own
administrative action.”). 	Lastly, exercising federal jurisdiction
over this action and others similar to it would not likely have a
significant effect on the federal-state division of labor. 	Grable,
545 U.S. at 315.4 	Accordingly, because Plaintiff’s right to relief
necessarily depends on the resolution of a substantial question of
4 For the sake of completeness, the Court distinguishes the present case
from 	Adventure 	Outdoors 	v. 	Bloomberg, 	552 	F.3d 	1290 	(11th 	Cir. 	2008).
Unlike Adventure Outdoors, where the Eleventh Circuit concluded that a
state-law defamation claim did not raise a “substantial issue of federal
law” because the asserted federal issues were fact-bound and situation
specific, 	the 	federal 	issue 	presented 	here 	is 	a 	purely 	legal 	question
and is arguably dispositive of Plaintiff’s claim if Defendants’ position
prevails. 	Id. 	at 	1301. 	Moreover, 	the 	Court’s 	concerns 	in 	Adventure
Outdoors that exercising federal jurisdiction would open the doors too
wide to numerous claims do not exist here. 	Unlike the general law of
defamation that the Court in Adventure Outdoors observed commonly appears
in state law causes of action, id. at 1302, the federal issue here arises
from a narrow federal statute that Defendants contend grants exclusive
federal 	authority 	over 	the 	legality 	of 	the 	event 	contracts 	that 	give
rise to Plaintiff’s claims.
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federal 	law, 	this 	Court 	has 	subject 	matter 	jurisdiction 	under 	28
U.S.C. § 1331.
CONCLUSION
Lawyers 	(and 	sometimes 	judges) 	often 	make 	the 	simple
complicated. 	But 	sometimes 	they 	also 	oversimplify. 	The 	pending
motion 	presents 	the 	temptation 	to 	do 	either. 	The 	Court 	here
attempts 	to 	avoid 	both. 	Congress 	has 	conferred 	jurisdiction 	on
the 	federal 	courts 	if 	a 	civil 	action 	arises 	under 	a 	federal
statute. 	The Courts have consistently rejected an over-simplified
interpretation that would require a federal statute to be the sole
basis 	for 	the 	claim 	for 	a 	federal 	court 	to 	have 	jurisdiction.
Courts 	have 	sometimes 	over-complicated 	this 	issue 	by 	making 	the
distinction 	between 	an 	affirmative 	defense 	and 	an 	essential
element to be resolved as part of Plaintiff’s claim. 	Synthesizing
these cases, the Court concludes that for federal jurisdiction the
plaintiff’s right to relief must be dependent on the resolution of
a 	substantial 	question 	of 	federal 	law. 	Plaintiff 	here 	contends
that 	it 	is 	entitled 	to 	recover 	gambling 	losses 	arising 	from
contracts 	that 	are 	illegal 	under 	Georgia 	law, 	while 	Defendants
contend 	that 	those 	same 	contracts 	are 	authorized 	and 	exclusively
governed by federal law. 	Thus, an essential element of Plaintiff’s
claim, 	the 	legality/illegality 	of 	the 	contracts, 	necessarily
depends 	on 	the 	application 	of 	federal 	law. 	Because 	Plaintiff’s
right 	to 	relief 	depends 	upon 	the 	resolution 	of 	a 	substantial
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question of federal law, Plaintiff’s motion to remand (ECF No. 35)
is denied.
IT IS SO ORDERED, this 2nd day of February, 2026.
S/Clay D. Land
CLAY D. LAND
U.S. DISTRICT COURT JUDGE
MIDDLE DISTRICT OF GEORGIA
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