Nevada Hits Back at Prediction‑Market Giant Kalshi
The Nevada Gaming Control Board and the state attorney general have filed a lawsuit against Kalshi in Carson City District Court. The action follows a federal appeals court denial of Kalshi’s request to halt state enforcement.
Why Nevada is Acting
- Unlicensed Operations: Kalshi allegedly runs a sports‑betting service without the required state license.
- Rapid Growth: The company’s business volume on Super Bowl Sunday this year was 27× higher than last year.
- Market Impact: Nevada’s licensed operators reported declining revenue, prompting concerns that Kalshi threatens the integrity of regulated markets.
Kalshi’s Defense
Kalshi argues that federal law exclusively governs prediction markets, and state enforcement duplicates issues already addressed by the Commodity Futures Trading Commission (CFTC). The company petitioned a federal court to take over the state case, hoping for a favorable ruling.
CFTC’s Position
The CFTC sided with another event‑contract firm in a similar dispute. Chairman Michael Selig released a video defending the agency’s authority over these markets, warning that challengers would face court action and underscoring the CFTC’s role in protecting such platforms.
The Broader Landscape
- Historical Context: Prediction markets have intrigued scholars for years and gained mainstream attention during the 2024 U.S. presidential election, with platforms like Polymarket attracting millions in bets.
- Current Focus: Kalshi’s traffic is now dominated by sports and crypto betting, with over 90% of funds tied to sports events.
- Industry Response: Traditional sportsbooks—FanDuel and DraftKings—have launched their own prediction markets, attracted by lighter regulation and lower taxes.
- Regulatory Tensions: Regulators in Maryland and New Jersey are also confronting the industry, setting up a potential Supreme Court review of sports‑betting contracts on prediction platforms.
What’s Next?
The lawsuit may shape the future of regulated betting in Nevada and beyond, potentially influencing national policy on prediction markets and sports‑betting contracts.
