Prediction Market Kalshi Ordered to Cease and Desist in Nevada

Kalshi, one of the fastest-growing prediction markets in America, has hit a major roadblock in Nevada where it was ordered to cease and desist. Despite seemingly warming up toward such products, the US has yet to regulate them properly and some markets, regulators, and industry stakeholders remain opposed to them.

Kalshi Ordered to Exit Nevada

In a letter sent to Kalshi, the Nevada Gaming Control Board (NGCB) ordered the company to cease and desist, telling it that its products constitute illegal gaming. The NGCB emphasized that event-based contracts on sports are unlawful unless specifically approved and licensed by the regulator.

The authority clarified that contracts on political outcomes are prohibited in Nevada and that even licensed operators are not allowed to offer such products. Kalshi, for context, skyrocketed in popularity during the recent presidential election when players placed millions on bets on the eventual outcome.

Such wagers, unfortunately, violate Nevada’s public policy. Kalshi has therefore been ordered to halt its business and exit Nevada by March 14 at the latest.

Kalshi, which has yet to respond to the letter or issue a statement on the matter, could potentially dispute the NGCB’s cease-and-desist order, since its products are not considered betting. Instead, Kalshi users can buy “yes” or “no” contracts for a variety of events, ranging from sports outcomes to political elections and legal verdicts.

The Future of Prediction Markets Is Uncertain

Political wagers are still prohibited in America. Although certain companies, such as Kalshi, have offered prediction markets that are not betting in the traditional sense and fall under the authority of the CFTC rather than gambling regulators, the legality of such offerings has remained mostly hazy.

Many have been concerned about the fact that each state has its own gambling laws, while prediction markets, which are regulated by the CFTC, can circumvent local regulatory frameworks.

In Nevada, the cease-and-desist order came shortly after Rep. Dina Titus called for prediction markets to be discussed, implying that they “create a backdoor way to legalize sports betting” in markets where it is not yet legal. Nevada, which has become famous for its casinos, has been very strict on newer forms of gambling and slow to adopt change. Because of its reliance on land-based properties, the state is unlikely to support new forms of online gambling, which could compete with its core businesses.

Regardless, players have been flooding platforms offering such products, despite concerns that they undermine the integrity of democracy.

Tribal Organizations Are Opposed to Prediction Markets

Tribal gaming operators have likewise expressed dissatisfaction with the proliferation of prediction markets, asking the Commodity Futures Trading Commission to ban them for good. The Indian Gaming Association (IGA) alongside other tribal gaming groups, insisted that these markets put their gaming independence at risk and break current state and federal laws.

On the contrary, some have defended prediction markets because of their reliability when it comes to outcomes. Brian Armstrong, the co-founder and chief executive officer of Coinbase, recently spoke on the matter, noting that prediction markets are consistently outperforming traditional polls.