Kalshi Refuses to Quit Nevada's Gambling Stage
Nevada Regulator Faces Legal Challenge from Kalshi: Lawsuit Initiated
In a courageous move, New York-based prediction market player, Kalshi, dared to defy Nevada's command to halt operations by initiating a lawsuit in the U.S. District Court. This bold action came in response to Nevada's threats of criminal charges for flouting gambling laws, applied on March 14.
The Nevada Gaming Control Board flagged Kalshi for non-compliance, demanding it cease operations in the state or risk prosecution.
Kalshi's lawsuit, filed on March 19, aims to secure a permanent restraining order against members of the Nevada Gaming Control Board, the Nevada Gaming Commission, and Nevada Attorney General Aaron Ford.
The lawsuit alleges that Nevada's aggressive action infringes upon the federal regulatory framework Congress established for supervising futures derivatives on designated exchanges.
Nevada vs. Feds: A Poker Game Gone Haywire
Nevada's cease-and-desist letter on March 4 alleged that Kalshi's futures derivatives, or Contract for Differences (CFDs), resemble sports bets. The Board gave Kalshi until Friday to respond to its claims that its CFDs correspond to sports wagers, while arguing that Kalshi operates without a Nevada-issued sports pool license. In reply, Kalshi took an unexpected step – filing a lawsuit.
The crux of the disagreement surrounds the distinction between state-regulated sports betting and derivatives trading, with the latter falling under federal control by the Commodity Futures Trading Commission (CFTC). Kalshi emphasized its federal approvals, stating that it operates under the CFTC's exclusive jurisdiction, and offers customers the opportunity to invest in political as well as sports event contracts.
"These contracts are subject to rigorous oversight by the CFTC, and - importantly - they are legal under federal law," the lawsuit claims.
Nevada's Showdown under the Desert Sun
The ongoing courtroom drama in Nevada sets the scene for an exciting stand-off between Robinhood, Polymarket, other event prediction firms, the American gambling industry, and influential political figures.
Nevada Congresswoman Dinah Titus, a vocal critic of CFDs, has labeled them as conflicting with state gaming regulations. The American Gaming Association has expressed serious concerns over CFDs, while industry insiders speculate that multiple US tribal groups, united against them, argue they would devalue tribal gaming compacts.
The legal battle hinges on the controversy surrounding whether Kalshi's activities fall under federal futures regulation or state gaming laws, with implications extending across the U.S. Kalshi also faces cease-and-desist orders in New Jersey and is engaged in a related legal contest there.
- Despite Nevada's cease-and-desist letter on March 4, Kalshi, a New York-based prediction market player, has challenged the Nevada Gaming Control Board in court, aiming to secure a permanent restraining order.
- The lawsuit filed by Kalshi claims that Nevada's aggressive action against its futures derivatives infringes upon the federal regulatory framework established by Congress for supervising futures derivatives on designated exchanges.
- The crux of the disagreement between Kalshi and Nevada lies in the distinction between state-regulated sports betting and derivatives trading, with the latter falling under the exclusive jurisdiction of the Commodity Futures Trading Commission (CFTC).
- The lawsuit, initially filed on March 19, involves not just Kalshi, but also Robinhood, Polymarket, other event prediction firms, the American gambling industry, and influential political figures, as the legality of futures derivatives is questioned in Nevada and other states, including New Jersey.
