Earlier this month, US District Judge Andrew Gordon ruled in favor of the Nevada Gaming Control Board (NGCB), finding that companies such as Kalshi, Robinhood, and Crypto.com engage in illegal gambling when they sell shares tied to the outcomes of sporting events. Following this landmark decision, the NGCB issued an additional notice to casinos, sportsbooks, and other licensed operators, instructing them to refrain from any relationships with exchanges that continue to offer sports-event contracts in Nevada without a state gaming license.
Judge Andrew Gordon Sides With NGCB on Sports Event Contracts
The NGCB notes that Robinhood and Crypto.com agreed to stop offering sports event contracts in Nevada, but Kalshi has not. Kalshi is appealing Judge Gordon’s ruling, an effort the NGCB says it will “vigorously oppose.” According to the NGCB, a sports event contract constitutes a form of wagering, even if the betting occurs on an exchange overseen by the Commodity Futures Trading Commission (CFTC).
The NGCB warned that Nevada licensees without sports pool privileges who offer sports event contracts or partner with a company doing so without the proper license will be considered by the Board in evaluating the entity’s suitability to maintain a Nevada gaming license. The Board further stated that engaging in unlawful sports wagering or entering into a business relationship with an entity offering unlawful sports wagering in another state may call into question the good character and integrity of the licensee.
What Event Contracts Fall Under the NGCB’s Jurisdiction?
The Nevada Gaming Control Board has clarified that certain event contracts fall under its jurisdiction as wagering. According to the Board, this includes contracts tied to the outcome or partial outcome of sporting events, as well as other events such as the World Series of Poker, the Oscars, Esports, and political elections.
According to the NGCB, such offerings are only permitted in Nevada if the entity holds a nonrestricted gaming license with sports pool approval. Additionally, the entity has to meet all other requirements for sports wagering, including wagering accounts and sportsbook systems.
The NGCB is not alone in classifying sports event contracts as a form of sports betting. Regulators in several other states, such as Arizona, Michigan, Ohio, and Pennsylvania, have reached similar determinations. Some state regulators are already opposing sports event contracts, and it seems Kalshi is often at the forefront of that struggle. For example, recently, Kalshi was served another lawsuit in regards to dismantling its sports event contracts in jurisdictions that already have established sports betting laws.
Since the federal court sided with the NGCB in this case, we may start seeing more states filing lawsuits against operators who offer sports event contracts.