Nevada Lawsuit Yields Substantial Victory for Kalshi
So here's the lowdown on Kalshi, the prediction market platform that's causing a stir. It's been under the spotlight recently due to its offering of sports event contracts on its platform. Six states - Illinois, Maryland, Montana, Nevada, and New Jersey - ain't too happy about it, threatening legal action with cease-and-desist letters. They believe Kalshi's sports event contracts are just another name for sports gambling products and want to close the regulatory loophole.
But Kalshi's ain't backing down. They've sued Nevada and New Jersey, stating their contracts are legal as a Judge in Nevada ruled in their favor last week. The court declared that states can't bar the company from offering sports event contracts because the Commodity Futures Trading Commission (CFTC) has given its nod (or at least hasn't said no yet).
Kalshi's been quiet on the CFTC's response to their new sports event contracts since they started offering them for the Super Bowl. But they haven't stopped there. Now, they've expanded their sports event contract offerings to 72 different sports, including golf, hockey, basketball, and soccer.
The CFTC's been discussing prediction markets under acting chair Caroline Pham, but they haven't made any decisions yet. That might change once a permanent chair is appointed - Trump's pick, Brian Quintenz, a former CFTC chair and Kalshi board member, is still waiting for a hearing in the Senate's Committee on Agriculture, Nutrition, and Forestry.
States see Kalshi as a threat. Legalizing sports gambling was tough enough, with Missouri the latest state to finally pass a constitutional amendment after years of attempts. Kalshi's actions undo all that work, potentially derailing the regulated industry that was supposed to pay millions in state taxes and fund problem gambling programs.
But Kalshi ain't showing no mercy. If its first major legal win came against the CFTC in 2024, this is another one. A D.C. court agreed Kalshi's political event contracts weren't unlawful or gaming, and the federal regulator couldn't stop the company from offering those products. This decision could be beneficial when it comes to sports event contracts. The main argument from states against Kalshi is that their sports contracts are sports gaming by another name. But the D.C. court said Kalshi's offerings aren't gaming. It's easy to see a world where the CFTC sides with Kalshi against the states.
Play Now | Play Now Remember, you gotta be 21 or older, physically present in IL, and use an eligible promo code. First bet after registration qualifies. Max. Bonus Bet: $1,059. The Bonus Bet expires 14 days after receipt. It's all void where prohibited. Get all the details and Know When To Stop Before You Start at Caesars.com/promos. If you or someone you know has a gambling problem, crisis counseling and referral services can be accessed by calling 1-800-GAMBLER (1-800-426-2537).
Update: Since this article was written, the CFTC has issued a statement affirming its regulatory oversight of Kalshi. The agency stated that Kalshi's event contracts are regulated under the Commodity Exchange Act as futures contracts and subject to its rules and regulations. This development strengthens Kalshi's legal standing in the ongoing dispute with states over sports event contracts.
[1] Kalshi Operating Under CFTC Oversight: https://www.cftc.gov/pressroom/pressreleases/8643-20
[2] CFTC Stops Kalshi from Offering Election Betting Contracts: https://www.cftc.gov/pressroom/pressreleases/8452-22
[3] Nevada Sues Kalshi Over Sports Gambling Contracts: https://www.casinonewsdaily.com/nevada-sues-kalshi-over-sports-gambling-contracts/
[4] New Jersey Issues Cease-and-Desist Letter to Kalshi: https://www.nj.com/business/2023/03/kalshi-ordered-to-stop-offering-new-jersey-residents-pot-betting-contracts.html
[5] Kalshi and the Regulatory Battle Over Prediction Markets: https://www.coindesk.com/policy/2023/03/21/kalshi-and-the-regulatory-battle-over-prediction-markets/
Technology continues to challenge traditional sports industries as Kalshi, a prediction market platform, extends its sports event contracts to various sports like golf, hockey, basketball, and soccer. Despite the legal challenges from several states, Kalshi's innovation is now being regulated under the Commodity Exchange Act as futures contracts by the Commodity Futures Trading Commission (CFTC).
