- A federal judge denied a request from the Nevada Gaming Control Board for a temporary restraining order against Kalshi
- The judge in turn agreed to a request from Kalshi for a temporary restraining order and preliminary injunction against the gaming commission
- Kalshi will be able to continue offering its sports event contracts in Nevada during its lawsuit against the commission
Kalshi notched a victory in federal court for what will likely be the first of many battles for the future of sports event contracts.
U.S. Federal Chief Judge Andrew P. Gordon granted Kalshi’s request for a temporary restraining order and preliminary injunction against the Nevada Gaming Control Board, effectively allowing Kalshi to continue offering its sports event contracts in Nevada as the litigation continues.
KalshiEX LLC filed lawsuits against both the New Jersey Division of Gaming Enforcement (NJ DGE) and Nevada Gaming Control Board (NGCB) for cease-and-desist notices sent to the company regarding their sports event prediction markets.
First Ruling Goes Kalshi’s Way
Oral arguments for Kalshi and the Nevada Gaming Commission were heard yesterday in U.S. District Court for the District of Nevada. Counsel for both Kalshi and the Nevada Gaming Control Board requested temporary restraining orders and preliminary injunctions against each other for the litigation proceedings.
Judge Gordon granted Kalshi’s motion for a temporary restraining order and preliminary injunction against the Nevada Gaming Control Board, which will effectively allow Kalshi to continue offering its sports event contracts in the state throughout the litigation.
“Defendants cannot overcome the statutory text showing that the CFTC has ‘exclusive jurisdiction’ over trading on CFTCregulated exchanges – indeed, Defendants conspicuously do not try. Nor do Defendants have any answer to Congress’s purpose in the 1974 CEA amendments, which, as many courts have concluded, was to subject futures markets to a comprehensive federal regulatory scheme and avoid the chaos that would result from inconsistent state-level enforcement,” Kalshi counsel wrote in its reply to the board’s request for a temporary restraining order and preliminary injunction.
Up next is a status hearing scheduled for April 30 at 10:30 a.m. PST.
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Who Regulates Sports Event Contracts?
At the heart of the litigation is the key question as to who actually regulates sports event contracts. Kalshi believes that state regulatory bodies do not have the right to intrude on the government’s “exclusive” authority to regulate prediction markets.
The Nevada Gaming Control Board levied a cease-and-desist notice against Kalshi in early March, ordering the company to stop offering its sports event contract markets in the state by March 14. The New Jersey Division of Gaming Enforcement issued its own cease-and-desist against Kalshi and Robinhood on March 27, giving the companies until midnight, March 29, to pull their sports event contract markets from the state.
Kalshi did not acquiesce to either cease-and-desist notices, instead suing the boards for their orders.
Kalshi argues that Congress previously gave the Commodity Futures Trading Commission (CFTC) exclusive jurisdiction to regulate futures trading on approved exchanges. As the CFTC has allowed Kalshi to launch its sports event contract markets, state law cannot “intrude on the comprehensive federal scheme for regulating designated exchanges.”
“Kalshi is a federally-designated and approved derivatives exchange, subject to the CFTC’s exclusive jurisdiction. It offers consumers the chance to invest in many types of event contracts, including, as relevant here, sports-outcome contracts. These contracts are subject to extensive oversight by the CFTC, and – critically – they are lawful under federal law. Two months ago, the CFTC allowed Kalshi’s sports-outcome contracts to take effect without review,” Gurbir S. Grewal of Milbank LLP, counsel for Kalshi, wrote in the lawsuit against the NJ DGE.
Kalshi Co-Founder and CEO Tarek Mansour noted in a recent interview the company will only cease offering the sports event contracts if ordered by the CFTC.
Kalshi, a prediction market platform, has been granted a temporary extension to offer sports event contracts in Nevada. This decision comes as a result of the Nevada Gaming Control Board’s approval of Kalshi’s request to continue operating in the state.
Kalshi is a unique platform that allows users to trade on the outcome of real-world events, including sports events. By offering sports event contracts, users can bet on the likelihood of specific outcomes, such as the winner of a game or the total number of points scored.
The extension granted to Kalshi is significant for both the platform and its users. It allows Kalshi to continue offering sports event contracts in Nevada, providing users with the opportunity to engage in this form of prediction market trading.
This decision also highlights the growing acceptance and recognition of prediction markets as a legitimate form of betting and trading. By allowing Kalshi to operate in Nevada, the Gaming Control Board is acknowledging the value and potential of prediction markets in the gambling industry.
Overall, the temporary extension granted to Kalshi to offer sports event contracts in Nevada is a positive development for both the platform and its users. It demonstrates the increasing acceptance and legitimacy of prediction markets as a form of betting and trading, and provides users with continued access to this unique and exciting form of entertainment.