- Nevada Gaming Control Board has issued a cease-and-desist notice to Kalshi
- The gaming control board takes issue with Kalshi’s sports and election event trading markets
- Kalshi has until March 14, 2025, to cease operations in the state
Nevada is the first state to take official action against Kalshi and its event trading markets.
The Nevada Gaming Control Board (NGCB) issued a cease-and-desist to KalshiEX LLC, ordering the regulated exchange and prediction market company to cease operations in the state by March 14, 2025.
According to the notice, Kalshi’s event-based contracts for sports and elections is “unlawful in Nevada, unless and until approved as licensed gaming by the Nevada Gaming Commission.”
In Violation of Nevada Gaming Law
Kalshi, which is regulated by the Commodity Futures Trading Commission, jumped into the sports event trading contract game in late January.
According to the company’s CFTC filing, Kalshi customers can purchase contracts for anywhere from $0.01 and at most $0.99. For each correct contract the customers hold, they will receive $1 in return. Losing contracts obviously return nothing.
Because the service is regulated by the CFTC, Kalshi can offer its contracts to users through every state in the country.
However, the NGCB believes Kalshi is violating numerous Nevada Revised Statutes and Nevada Gaming Commission Regulations by offering the sports event contracts.
Additionally, the board informed Kalshi that even licensed sports pools in the state are prohibited from accepting wagers on elections.
“Every sports pool in Nevada must undergo an extensive investigation prior to licensing, must adhere to strict regulation once licensed, and must pay all applicable taxes and fees,” NGCB Chairman Kirk Hendrick said in a press release. “Any unlawful attempts to circumvent Nevada’s right to regulate gaming activity within its borders will be met with the full force of criminal and civil penalties.”
Kalshi Offers Several Sports Event Contracts
When launching the service in January, Kalshi only offered sports event contracts on Super Bowl LIX to its users. However, Kalshi now offers a number of different contracts on several types of sports events.
It’s currently offering sports event contracts on the winner of the NBA championship, the NCAA men’s basketball tournament, and the NHL championship, among many other.
The company also submitted a filing in February with the CFTC to offer single-game event contracts. It offered a few single-game event contracts in tennis markets, but nothing is currently available.
The Nevada Gaming Control Board recently issued a cease-and-desist order to Kalshi, a prediction market platform that allows users to bet on the outcomes of real-world events. The order comes after an investigation by the Board found that Kalshi was operating in violation of state gambling laws.
According to the Board, Kalshi was offering bets on events such as political elections and economic indicators without obtaining the necessary licenses to operate as a gambling platform in Nevada. The Board also raised concerns about the potential for manipulation and insider trading on the platform, as well as the lack of consumer protections for users.
In response to the order, Kalshi has agreed to suspend its operations in Nevada and work with the Board to come into compliance with state regulations. The company has also stated that it takes the concerns raised by the Board seriously and is committed to ensuring a safe and fair gaming environment for its users.
This case highlights the challenges that prediction market platforms like Kalshi face when operating in highly regulated markets such as Nevada. While these platforms offer an innovative way for users to engage with real-world events, they must also navigate complex legal and regulatory frameworks to ensure compliance and protect consumers.
Moving forward, it will be important for companies like Kalshi to work closely with regulators and industry stakeholders to address concerns around transparency, fairness, and consumer protection. By doing so, they can continue to offer exciting and engaging gaming experiences while also upholding the integrity of the industry.
