Nevada Considers Civil Enforcement Action Against Kalshi

Nevada’s war on prediction markets continues with mulled legal action against Kalshi, one of the forerunners in this sector. This comes shortly after Nevada reported its post-PASPA low in terms of Super Bowl betting.

Nevada’s Fight Against Prediction Markets Rages On

Nevada officials are eyeing a potential civil enforcement action against Kalshi in state court, further highlighting the Silver State’s relentless stance on prediction markets. As the sector’s growth continues, regulatory pressures also continue to mount.

Prediction markets are a novel entertainment product where players can buy yes-no shares in the outcome of an event. Unlike traditional sportsbooks, where the odds are set by the house, such event contract platforms use a peer-to-peer approach where players play against one another.

Prediction markets are currently under the purview of the Commodity Futures Trading Commission, allowing them to operate in virtually all states, even those that do not have legal gaming. However, this freedom has irked traditional sportsbooks, tribal gaming authorities, and gaming regulators, resulting in strong pushback against the vertical.

The Legal Action Adds More Pressure to Kalshi

The latest legal action, according to what state officials told the Ninth Circuit US Court of Appeals, seeks to crack down on Kalshi, which has experienced strong growth in trading volume, while traditional sports betting continues to decline in the Silver State.

The filing accused Kalshi of continuing to expand its business while seeking a stay of enforcement in Nevada. This expansion, officials argued, effectively undermines Kalshi’s responsibility to preserve the status quo during its appeal process.

At the same time, regulatory representatives accused Kalshi of continuing to offer illegal sports betting, without abiding by the same rules traditional sportsbooks do, effectively giving it a strong advantage over its traditional sportsbook competitors.

Since nothing prevents officials from pursuing enforcement, officials said that they are planning civil enforcement action, following their obligation to enforce the gaming laws.

Gaming attorney Daniel Wallach called this a smart move on Nevada’s side, as it will speed things up a bit and circumvent the current impasse. He noted that otherwise, the 9^th Circuit merits panel may have “sat on the stay motion until April, if not longer,” effectively allowing Kalshi to continue doing its business.