Federal Judge Finds Kalshi Must Follow Nevada Gaming Laws

^{Kalshi is planning to appeal a federal judge's mandate that the platform must comply with Nevada gaming regulations, saying their offerings greatly differ from that of state-regulated sportsbooks. (Photo: Timon Schneider / Alamy)}

A federal judge ruled that prediction market platform Kalshi must comply with Nevada’s gaming regulations, putting an immediate halt to the site’s sports-based markets in the state.

US District Judge Andrew Gordon sided with the Nevada Gaming Control Board (NGCB) in his ruling on Nov. 26, ending a preliminary injunction he issued earlier in the year that allowed Kalshi to continue offering contracts on sporting events in the state.

Kalshi Vows to Appeal Ruling

The NGCB had ordered Kalshi to stop offering sports contracts in Nevada in March, before Judge Gordon issued the injunction in April. 

Kalshi has said it will appeal the ruling and will ask Judge Gordon for a stay while it engages in that process. 

“As other courts have recognized, Kalshi is a regulated, nationwide exchange for real-world events, and it is subject to exclusive federal jurisdiction,” Kalshi head of corporate development Sara Slane said in a statement. “It is very different from what state-regulated sportsbooks and casinos offer their customers. We are evaluating the decision and anticipate making an appeal to the Ninth Circuit.”

But Judge Gordon found fault with Kalshi’s usage of the Commodities Exchange Act to claim that no state can regulate it as long as it is registered with the Commodity Futures Trading Commission (CFTC).

“Kalshi’s interpretation would require all sports betting across the country to come within the jurisdiction of the CFTC rather than the states and Indian tribes,” Gordon wrote. “That interpretation upsets decades of federalism regarding gaming regulation, is contrary to Congress’ intent behind the CEA, and cannot be sustained.”

NGCB Wants Kalshi to Follow Robinhood, Crypto.com Out of Market

On Tuesday, Gordon also ruled against Robinhood, which was also seeking an injunction that would have allowed its users access to Kalshi’s sports-based contracts. He similarly rejected a request for a preliminary injunction from Crypto.com in October.

In accordance with that ruling, Robinhood has announced that it will stop offering any contracts based on sporting events in Nevada beginning on Dec. 1, at least temporarily. However, the NGCB says that Kalshi isn’t cooperating in the same manner as other companies that have lost in court over this issue.

“Unlike both Robinhood and Crypto.com before them, Kalshi has declined to reach an agreement with the Board to stop operating in Nevada pending further proceedings, despite today’s clear legal ruling and the fact that they were provided a very reasonable opportunity to do so,” NGCB Chairman Mike Dreitzer said in a notice to licensees in Nevada. “Kalshi instead has asked Judge Gordon to stay his ruling pending its appeal. The Board will vigorously oppose that motion and will continue to expeditiously pursue a path through the courts to stop Kalshi’s unlawful conduct.”

Kalshi has engaged in legal battles with regulators in several states over its sports offerings, and has also drawn the ire of tribal groups who feel that prediction markets are encroaching on their sportsbook offerings.

Prediction markets have increasingly overlapped with the sports betting industry in the past year. Recently, both FanDuel and DraftKings abandoned their own plans for licensing in Nevada, opting instead to pursue launching prediction platforms in at least some states. Both companies also left the American Gaming Association over that decision.