Kalshi fights to stay
New York-based prediction market provider Kalshi is fighting Nevada’s order to stop operating in the state via a lawsuit filed late last week with the US District Court.
stop its operations in the state on March 14
The Nevada Gaming Control Board warned Kalshi to stop its operations in the state on March 14 or face criminal charges for violating gambling laws.
Kalshi’s suit, filed Friday, seeks a permanent injunction against members of the NGCB, the Nevada Gaming Commission, and Nevada Attorney General Aaron Ford.
Kalshi claims in the suit that Nevada’s prohibitive action “intrudes upon the federal regulatory framework that Congress established for regulating futures derivatives on designated exchanges.”
Feds vs state pickle
The NCGB’s March 4 cease-and-desist letter to Kalshi stated that the futures derivatives offered, or Contract for Difference (CFD), closely resembled sports bets.
The NGCB gave Kalshi an extension until Friday to respond to its order that its CFDs resembled sports wagers and Nevada had not licensed the firm to operate a sports pool. Kalshi complied, albeit in response via a lawsuit.
In its action, Kalshi outlines the key point of contention over CFDs – namely, that unlike state-regulated sports betting, derivatives trading falls under the federal control of the Commodity Futures Trading Commission.
In its suit, Kalshi asserted its federal approvals, that it was “subject to the CFTC’s exclusive jurisdiction,” and gave customers access to invest in “political-outcome contracts and sports-outcome contracts.”
“These contracts are subject to extensive oversight by the CFTC, and – critically – they are lawful under federal law,” the lawsuit claims.
Kalshi requested the court impose a “declaratory judgment for a preliminary and permanent injunction.”
All eyes on Nevada
The legal battle now playing out in Nevada sets up an apt showdown in the desert the likes of Robinhood, Polymarket, other event prediction firms, the US gambling industry, and political heavyweights will be closely monitoring.
One of the loudest voices against CFDs comes out of Nevada, home state of Congresswoman Dinah Titus. The Democrat has slammed CFDs as being contrary to state gaming regulations.
Likewise, the American Gaming Association has expressed “very strong concerns” over CFDs, while multiple US tribal groups have banded together to argue against them, stating they “would destroy the value of tribal gaming compacts.”