Bloomberg Audio Studios, podcasts, radio news. Arizona has filed criminal charges against cal She, accusing the company of operating an illegal gambling business. To Max Tim snowk joins us now with Kaushi Kofouna and CEO Tim take it away. Hi, We're joined by Tarak Monsieur. He's the CEO and co founder of Call She. Tarak, good to see you. Thanks for joining us on this.
Look.
Even though other state regulators have taken steps to crack down on what they say is unlicensed betting on call She's site, Arizona appears to be the first to escalate to criminal charges. What is your response to these charges?
Look, I mean, these charges have nothing to do with gambling or the merits. If it was about gammling or remote they would let the judicial process fright its course in the federal courts. You know, five days ago on Thursday, CALCI filed suit against Arizona and federal courts on the mets on whether Calshi is subject.
To exclusive jurisdiction of the CFTC.
And you know, we're gone from an opposition and wanted to let the court process play out.
And instead of letting that happen.
The Arizona Attorney General decided to subvert the judicial process and weaponize it and go to state court and file these criminal charges, which you know, we view as merit lists and basis. We see this as a total overstep and we look forward to finding it in court.
Well, experts are saying this could be the first of many charges such as these from other states too. How does it change your legal strategy.
Well, this is the whole point of federal preemption. So this is not about camera. The charges that the attorney general filed are not about gambling, they're not even about sports only. They're about prediction markets writ large. It's just, you know, attacking the entire business model. And nothing prevents from the same attorney general or others from fighting the
same criminal charges against derivatives markets writ large. They could file the same exact charges under the same analysis against CME or Ice or NASTAC. And that's the whole point of federal regulation of these financial exchanges is to prevent this sort of chaos and these sort of attacks on these businesses that could be political in nature or or other.
And that's a very important distinction.
Well, I read the charging document from the Attorney General as twenty charges. They're mostly about betting and wagering when it comes to sports, there's some election stuff in there. Would you ever consider limiting your business in Arizona or other states to things that these ags don't seem to have problems with, like economic data, the price of bitcoin, what markets are going to do predictions around those things.
Look, I mean the AGE also claimed that we have war markets, which is incorrect. It's either flat out to lie or it's misinformed take which is unfortunate for someone's you know, filing criminal charges against the company. What's more important here, again is this is not about the merits. If it's about the merits, let's let the judicial process run its.
Course in federal courts.
This is about something other than the merits, which is what I'm focused on. I don't know what the AG is focused on, but you know she is off for reelection. You know, it does, it did some press, It does seem to be making some buzz. But what I'm really focused on is building create product for URM lends of customers, out of which close to four hundred thousand are in Arizona, and fighting any of these basless cases in courts, which was which we're going to continue doing.
So you're fighting the cases. As I mentioned, Arizona is not the only state to take issue with your business. What happens ultimately if courts do side with states, what does it mean for the future of your company.
We believe in the rule of law.
Right, we will always abide by court decisions.
The law applies to us, but it also applies.
To the government, including state governments, and that's a very important thing.
Right.
This is really not about our business model. Again, if it was about our business model, we would be focused on the federal courts and the lawsuit about the merits. This is a broader attack, and you know many states have sided with us and have granted us a preliminary in junction agreeing with our legal analysis. We have spent four years getting regulated by the federal government, and we have a federal government in the CFTC that is come
strongly in favor of our position. Following these charges is a total total overstep and an overreach from an ag that's up for reelection, and we find that unfortunate. But we will stay focused on what we do best, which is building a great product.
So certainly the CFTC. We know where the CFTC stands, and we know where Michael Mike Selig stands on this. We don't know where courts stand on this. And I'm wondering if if we see a state like Nevada, for example, block access to your business, what will you do? Will you continue to operate or will you will you say, Okay, we're not going to operate in Nevada.
Well, first of all, let's let's get to that point, and you know, we'll have to make a decision as the company what we do. What I can reiterate is we will one hundred percent abye by the law.
That's what we will do as a company. It's always been our position.
That's why we spend four years getting regulated upfront, regulatory first as a company and.
Always abide by the law.
But what I always say, the law applies to us as much as it applies to the government. And government oversteps the law and goes out of bound, We're going to fight that in court, which we look forward to.
How long does that process take? Because it seems like there's a regulatory limbo happening. You're you're it's almost like your legal team is going to have to play whack the moll with all these states that are that are filing suit or bring in criminal charges. How long is this going to take?
And gladly we have a legal team to handle these types of things and they're going to be focused on and you know, maybe it's a question for them. I mean, look, whatever long it takes, we're going to fight for prediction markets. I spent eight years building this company, four out of which I have a which are getting regulated upfront.
I really believe in this marketplace.
I'm very excited about the growth that we're seeing some of the fast growing company companies in America right now. And so what I'm going to be focused on is keep building a great product, and that's what's sort of most important for me. The more important sort of question is, you know, when it comes to this is not really about you know, whether this is gambling or not. This is not really about state versus federal which are both
co existing and both growing both models. This really is turning into sort of some special interests that like the status quo.
The status always worked.
Very well for monopolies, but not for the consumers that are flocking to prediction markets right now.
Which we're going to keep plighting for Tark.
There is this perception though that people think this is gambling. An IPSOS survey from just a few weeks ago, for example, show sixty one percent of adults safe prediction market trading is closer to gambling. Eight percent say it's closer to investing. So there is this public perception that doesn't necessarily match with what you say. The platform is how do you respond to that and how do you battle that? Like, how is this not gambling?
I haven't really looked at these polls, you know. The thing I will say is there's always been a battle of whether financial derivatives are gambling. Great features were called gambling and the eighteen hundreds, and there was a Supreme Court decision that you know, said even though there's speculation, these you know, products have financial our structures the financial markets, and thus are going to fall under financial market jurisdiction.
So I always say this, you know, whether it's something feels and looks like gambling doesn't necessarily make it gambling. Speculation exists in all financial markets. If we're going to take a line that speculation is gambling, then the stock market with retail participation is gambling, then buying options for retail, or is your data to expire options is gammling, then retail buying crypto is gambling. The more important line in the historical line that we've been taking under the law,
but also as you think about it societally. Is the business model a gambling business model, which is a model where the revenue of the business and the profits are equal to the customer's losses, in which case the incentive is to promote more losses and blog the winners. Or is it an open, free and fair marketplace where people can enter in and out freely and transparently, which is a financial exchange, in which Calci falls under.
Tark Monsieur Calci co founder and CEO. Tark always good to speak with you. Thanks so much for joining us.