The last few months for prediction company Kalshi have seen a whirlwind of activity with uncertainty, and on Tuesday the operator took another hit.
The Nevada Gaming Control Board (NGCB) issued a cease-and-desist order to Kalshi to end their operations in the Silver State and exit the market on Friday, March 14 by 5 p.m., citing violations of state gaming laws and for engaging in unlawful gaming activity such as “event-based contracts” on sporting events and election outcomes, all of which are unlawful in the state unless approved as a licensed gaming operator by the Nevada Gaming Commission (NGC).
Any non-compliance to the order could lead to criminal or civil penalties.
"Every sports pool in Nevada must undergo an extensive investigation prior to licensing, must adhere to strict regulation once licensed, and must pay all applicable taxes and fees," said NGCB Chairman Kirk Hendrick in the letter.
"Any unlawful attempts to circumvent Nevada's right to regulate gaming activity within its borders will be met with the full force of criminal and civil penalties."
Prediction markets such as Kalshi, Polymarket, Augur and PredictIt differ from traditional sportsbooks in that they are regulated at the federal level by the Commodity Futures Trading Commission (CFTC), allowing them to operate across all 50 states.
The CFTC is an independent federal regulatory agency tasked with overseeing the U.S. derivatives markets. This regulatory distinction has created major issues with state gaming authorities, especially in Nevada, which imposes strict oversight on gambling-related activities.
Kalshi exploded onto the American landscape with their real-time markets on last November's Presidential election.
"While we’re disappointed with the Commission’s assessment, Kalshi has always held the utmost respect for regulators and the regulatory process. We’ve been a federally regulated exchange for over four years and a federally regulated clearinghouse for about six months. We are proud to have paved the way for prediction markets to thrive in the U.S. We look forward to a swift resolution to this matter and to ensuring that Americans continue to have access to safe, regulated, and transparent prediction markets," said an official Kalshi spokesperson on the matter.
Titus Letter
All of this comes on the heels of a letter sent by Nevada Congresswoman Dina Titus (D) in late February.
Titus, who has represented Nevada's First District since 2013, announced in a tweet back on Feb. 24 that she had sent a letter due to concerns about legalizing prediction markets on sports contracts, arguing it could undermine state-regulated sports betting, consumer protections, and tax revenues adding that it is a backdoor way to allow sports wagering in all 50 states.
The CFTC will be holding a public roundtable later this month to discuss regulating prediction markets, including sports-related contracts. The commission had requested public input on the matter, also known as Titus' letter, by Feb. 24.
