Kalshi has lost another key court battle in Nevada, keeping the prediction market platform from offering event outcome contracts in the Silver State.
Key Takeaways
- A Nevada judge wasn’t convinced of Kalshi’s argument that “swaps” aren’t the same as bets.
- The 14-day ban was extended to April 17 to buy time for a permanent injunction.
- Nevada is the first U.S. state to effectively ban Kalshi from offering event contracts.
Judge Jason Woodbury extended a 14-day ban on Friday that was set on March 20 to April 17, and he indicated this gives him time to issue a permanent injunction against Kalshi, according to a Reuters report.
The prediction market company filed a lawsuit last year against the Nevada Gaming Control Board, arguing that its federally regulated platform allows it to offer sports contracts in all 50 states. Regulators claimed that Kalshi’s sports contracts violated state gaming laws.
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The losing argument
Nevada has sought to take action against Kalshi for operating without a sports betting license. Kalshi continues to argue in court that its contract trades are “swaps,” not bets.
Woodbury didn’t agree and sided with regulators, saying he could place a $100 bet at Kalshi just as he could at a licensed sportsbook.
"No matter how you slice it, that conduct is indistinguishable," Woodbury said. "So I find based on the arguments that have been presented that it is a gaming activity that is prohibited for any non-licensee to engage in.”
Fighting back
Nevada is the first state to legally prohibit Kalshi from operating there, and following the preliminary injunction being put in place, the prediction market platform will have to obtain a gaming license to operate in the Silver State.
Massachusetts recently acquired an injunction that’s on hold pending an appeals process, and nearly a dozen U.S. states are currently entangled in court battles with trading exchanges, including Kalshi, Polymarket, Robinhood, Coinbase, and Crypto.com.
Lawmakers in 12 states have introduced legislation this year that would ban or restrict Kalshi and others from operating.
The battle continues
Nevada’s win could be used by other states seeking legal victories, but these battles over what is and what isn’t gambling in relation to prediction markets could eventually be decided by the Supreme Court in the coming years.
Last week, the Commodity Futures Trading Commission (CFTC), which regulates derivative markets that Kalshi offers, sued Illinois, Arizona, and Connecticut over their efforts to keep prediction market companies from offering sports contracts in those jurisdictions.
The CFTC claims that those states, which have sent cease-and-desist orders to trading exchanges like Kalshi, are violating the federal agency’s “exclusive jurisdiction” over regulation of prediction markets.
