Ruling Stops Kalshi from Offering Sports Contracts in Nevada

A Las Vegas federal court has given Nevada gaming regulators the go-ahead to act against Kalshi, a prediction-market operator. 

Nevada Regulators Gain Ground as Court Blocks Kalshi’s Bid to Offer Sports-Based Markets

This decision puts a stop, at least for now, to the company’s attempts to offer sports-related contracts in the state. US District Judge Andrew Gordon made this ruling on Monday, overturning his earlier preliminary order from April. That previous order had protected the firm from enforcement while its lawsuit against state officials was ongoing.

Gordon concluded that Kalshi’s view of its business would put sports betting under the sole control of the federal commodities regulator. He said this stance goes against long-standing lines between federal oversight and state control of gambling, reported The Nevada Independent. He pointed out that treating sports outcomes as regulated derivatives would upset decades of regulatory practice and lacked support from congressional intent.

Betting platforms like Kalshi let traders buy and sell binary contracts linked to real-world results. The company says it works as a supervised exchange under the Commodity Futures Trading Commission‘s watch. However, officials in Nevada, along with almost two dozen other states and tribal areas, argue these contracts are just another type of sports betting that state law covers.

Football Prop Bets Undercut Kalshi’s Case, Prompting Judge to Back Nevada Regulators

Fresh evidence shown in recent hearings seemed to have an impact on the court’s viewpoint. Gordon highlighted certain football-related bets, such as wagers on when touchdowns would happen, as cases that weakened Kalshi’s claim that its products serve wider economic goals beyond just betting. In past cases involving another platform Crypto.com, he came to a similar conclusion, deciding that contracts linked to sports did not count as swaps under federal law.

After the ruling, Nevada gaming regulators reported that Kalshi had not stopped its operations in the state yet. They indicated they would fight any appeal by the company to halt enforcement during its appeal process. Kalshi said it did not agree with the decision and planned to ask the Ninth Circuit to review it. The company emphasized that its exchange differs from state-licensed sportsbooks.

The decision also affects Robinhood, which offers Kalshi’s contracts to its customers. Gordon turned down the brokerage’s request for temporary protection. He pointed out that Robinhood could lessen any disruption to its business by blocking Nevada residents until the case ends.

The fight over prediction markets is spreading across several federal courts, with judges handing down conflicting opinions on how to classify these platforms. Legal experts say the mix of rulings makes it more likely that the dispute could end up at the US Supreme Court since the CFTC has stayed quiet on the issue.