Kalshi Prices Chance of Lowering Meta’s $25 Billion Fine at 71%

Key Facts

Kalshi’s open market page on November 3 showed a 71% price for the option that the fine imposed on Meta in New Mexico would be reduced, versus 29% for no reduction. The displayed trading volume and liquidity were $77.5 each. The pricing follows an October 21 ruling that ordered the company to pay $25 billion in civil penalties under the state’s Unfair Practices Act. This is a prediction-market price, while the court has not determined the appeal’s outcome. One of the legal issues under consideration centers on the basis used to count the violations attributed to the company.

The New Mexico Department of Justice said the jury found that Meta committed 43,899,725 violations of state law. The official ruling breaks that total down into 43,899,720 willful unfair trade practices and five unconscionable trade practices. In its September 25 verdict, the jury deemed 26 of the company’s and its leadership’s 29 statements misleading, according to Reuters. The ruling said the 26 statements found to be violations spanned more than 11 years, from May 24, 2010, to August 18, 2021. The court said the statements were published across multiple public channels, including Facebook, newsrooms, earnings calls, interviews and conferences.

Law professor Peter Ormerod said the most arguable ground for appeal concerns whether a violation can be counted without evidence that a specific person saw or relied on the misleading statement and was harmed by it. He put it this way: “whether the violation would be counted even in the absence of any evidence that a specific person saw one of these misleading statements.” The issue directly concerns how statements the jury deemed misleading were converted into tens of millions of violations. State law allows a fine of up to $5,000 for each violation, according to Reuters. The number of violations was therefore a key element in calculating the case’s financial exposure.

The $25 billion ruling fell between the two amounts sought by the parties during the penalty phase. The state sought a fine of between $35 billion and $40 billion at an October 1 hearing, while Meta’s filings sought to cap penalties at $3.45 billion, according to Reuters. The judge said previous penalties, consent decrees and rulings had not deterred the company from using deceptive trade practices in its representations to consumers in New Mexico. The ruling said Facebook had 1,386,648 monthly active users in the state on June 30, 2020, while its population is estimated at about 2,100,000. This context reflects the scale of the platform’s presence in the state that brought the lawsuit.

The case dates to 2021, when the state’s attorney general filed suit against Meta after revelations that Cambridge Analytica had collected personal data from as many as 87 million Facebook users through a third-party app, according to Reuters. In a separate case within the broader litigation, the Associated Press said a jury in March found that Meta misled users about youth safety and ordered the company to pay $375 million; the judge then directed that $567 million be deposited into a fund for adolescent mental health. Meta also reached an $18 billion settlement in August with most states and territories, excluding New Mexico and Florida, according to the agency. New Mexico’s $25 billion ruling exceeds the Federal Trade Commission’s $5 billion fine against Facebook in 2019. These events place the current ruling within a series of disputes and penalties involving the company.

Meta said it was confident it would prevail on appeal, while Attorney General Raúl Torrez said he expected the company to challenge the ruling and that the state was prepared to defend its legal position. Reuters reported that the expected appeal would cover the jury’s verdict and the penalty. The Associated Press said interest would accrue on the fine during the appeal and that it could take years for the state to receive the money. After the ruling was announced on October 21, Meta shares rose 2%, according to the agency. The shares closed at $606.73 on November 2, according to EL7 data.