A Nevada district court on Friday prolonged a restriction preventing Kalshi from offering event-based contracts to residents of the state without obtaining a Nevada gaming license.
Judge Jason Woodbury, speaking at the conclusion of a hearing in Carson City, said he would enter the preliminary injunction sought by the Nevada Gaming Control Board. Under the injunction, Kalshi is barred from making available event contracts in Nevada that would let customers effectively wager on sports or other events unless the company first secures a state gambling license.
Attorneys for Kalshi, a New York-based operator of prediction markets, argued during the hearing that the products at issue are "swaps" that fall under the exclusive jurisdiction of the U.S. Commodity Futures Trading Commission. The CFTC has made a similar argument in related litigation.
Judge Woodbury said he was not persuaded by that argument. He drew a comparison between placing a wager through a Nevada-licensed gaming operator and purchasing a sporting-event contract on Kalshi's platform, saying the two activities are indistinguishable in their practical effect. "No matter how you slice it, that conduct is indistinguishable," he said. "So I find based on the arguments that have been presented that it is a gaming activity that is prohibited for any non-licensee to engage in."
The judge extended a temporary restraining order he had issued on March 20. That earlier order initially barred Kalshi from offering sports, elections and entertainment-related event contracts in Nevada for 14 days; Woodbury extended that ban through April 17 while he works to finalize the terms of a longer-term injunction.
Kalshi did not immediately respond to a request for comment.
Nevada is currently the only state to have secured a court-enforced, in-effect ban against Kalshi. The company has been at the center of a mounting legal dispute over the extent to which states can regulate prediction markets.
Operators like Kalshi facilitate trading in so-called "event contracts," which allow users to take financial positions tied to the outcomes of events ranging from sporting contests to elections and entertainment outcomes. In recent days, the U.S. Commodity Futures Trading Commission filed suit against three states to challenge their ability to regulate firms of this type.
One of those states, Arizona, recently initiated criminal charges against Kalshi for allegedly operating an illegal gambling business within its borders. A separate injunction issued in Massachusetts that would prevent Kalshi from offering sports event contracts in that state is currently on hold pending the company's appeal.
Readouts
- The court's action leaves in place a prohibition on Kalshi offering specific event contracts in Nevada while a more permanent injunction is drafted.
- The case highlights unresolved questions about the proper regulatory authority over prediction markets, with both state gaming regulators and the CFTC staking competing jurisdictional claims.