Kalshi Wins Nevada Injunction, Sports Contracts Remain

Posted on: April 11, 2025, 04:07h. 

Last updated on: April 11, 2025, 04:07h.

Todd Shriber @etfgodfather Read More

Expertise: Financial, Gaming Business, Mergers and Acquisitions.

• Ruling sets stage for Kalshi to continue offering sports contracts in Nevada.
• Judge leans on federal regulation of prediction markets operator.

Prediction markets operator Kalshi will continue offering sports-linked derivatives in Nevada after a federal judge granted the company an injunction against the Nevada Gaming Control Board (NGCB).

In a more a detailed ruling following a decision rendered Tuesday night, US District Court Judge Anthony Gordon noted Kalshi was positioned to prove its side, adding the NGCB was likely to fail to do so. Last month, the Nevada regulator sent a cease-and-desist letter to Kalshi, telling the operator to halt activities in the state by 5 p.m. on March 14 because it hadn’t received approval from the Nevada Gaming Commission (NGC) to offer political and sports event contracts in the state.

Kalshi has shown a likelihood of success on the merits,” wrote Judge Gordon in his ruling. “Conversely, the defendants have not shown a likelihood of success on their countermotion for injunctive relief, so I deny their motion.”

The ruling was released 10 days after Kalshi said it was suing the NGCB and the New Jersey Division of Gaming Enforcement (NJDGE) over its ability to offer sports event contracts in those states. The New Jersey gaming regulator also told the prediction markets firm to stop offering sports contracts in that state.

Nevada Ruling Could Be Huge for Kalshi

Kalshi recently received five cease-and-desist letters from Illinois, Montana, Nevada, New Jersey, Ohio. Regulators in several other states, including Connecticut and Massachusetts, have also said they want to examine the company’s offering of sports event contracts. Perhaps not coincidentally, online sports wagering is legal in all of those jurisdictions.

“Kalshi alleges in the complaint that this court has jurisdiction under 28 U.S.C. § 1331 because the action arises under the Supremacy Clause. Kalshi asserts the federal question is whether Nevada’s gambling laws are preempted by the Commodities Exchange Act (CEA) as applied to Kalshi,” wrote Gordon.

The judge added that the defendant, which is the state of Nevada, had yet to dispute federal jurisdiction over Kalshi in court. The Commodities Futures Trading Commission (CFTC) is the federal regulator to which derivatives platforms answer.

At a recent event, Kalshi co-founder and CEO Tarek Mansour reiterated that his company answers to federal regulators and that federal preemption could assist the firm in its various state-level legal battles.

Details Matter

One of the arguments presented by Nevada is that the CEA was not intended to preempt state gaming laws.  Some legal and sports betting industry experts have concurred with that take, noting that Kalshi is akin to a sportsbook operator because it collects a fee on its contracts, which is comparable to the vig applied on sports bets.

However, Kalshi argued it’s not involved in the pricing of the contracts on its platform, sports or otherwise. Rather, it’s a merely conduit for clients to participate in those markets. Gordon agreed.

“Rather, Kalshi is the exchange on which such contracts are entered into between the counterparties. A clearinghouse holds the contracting parties’ funds until the specified event occurs, at which point the clearinghouse settles the contract according to the event’s outcome,” according to the ruling.

The judge added that as of yet, there is no evidence to suggest the CFTC has taken steps to prohibit Kalshi from offering sports contracts.