Nevada gaming regulators filed a lawsuit on Tuesday seeking to block prediction market operator Kalshin from offering events contracts that allow its residents to bet on sports, including football and basketball games.
The Nevada Gaming Control Board filed the lawsuit as part of a growing battle nationally over the ability of state gaming regulators to police companies like Kalshi that allow consumers to place financial bets through their betting markets.
The Commodity Futures Trading Commission filed its suit on the same day as a brief in related litigation, arguing that companies like Kalshi have exclusive jurisdiction over prediction markets. For months, Kalshi has sought to block Nevada regulators from filing a case. But a federal appeals court on Tuesday refused to stay a judge’s November order lifting an injunction that prevented Nevada officials from pursuing enforcement action. If Nevada prevails, it would become the second state to obtain a court order barring Kalshi from awarding contracts to sports events, after a Massachusetts judge issued an injunction on Feb. 5 at the behest of the state attorney general.
That ban was to take effect in 30 days, but a state appeals court judge stayed it Tuesday while Kalshi appealed.
Tuesday’s lawsuit alleges that offering Nevada sports event contracts, or certain other event contracts, constitutes betting operations under Nevada state law and, as a result, Kalshi must obtain a license.
Kalshi also said state gaming regulations, including banning anyone under 21 from placing bets and requiring institutions that accept bets on sporting events to protect against bets by players and insiders such as match-fixing, were cited.
The state has already convinced judges to issue orders banning two other prediction market operators, Coinbase and PolyMarket, from offering contracts on events. A Nevada state court judge wants to issue a similar temporary restraining order against Kalshi, but the company asked to transfer it to federal court shortly after filing the case on Tuesday, raising the law on whether the case falls under the CFTC’s exclusive jurisdiction.
The New York-based company has argued that the federal regulator has full jurisdiction over its events contracts because they are a type of swaps, a type of derivative contract.
