US prediction market platform Kalshi had to stop its activities in the state with the latest decision of a court in Nevada. Judge Jason Woodbury of the First Judicial District Court in Carson City extended the temporary injunction he issued on March 20 for two weeks and announced that he would soon put the injunction requested by the Nevada Gaming Control Board into writing.
Lawsuits filed in Nevada and other states
Kalshi offers investors a market regulated by the US Securities and Exchange Commission (CFTC), which makes it possible to take positions on the outcome of various events. The company’s lawyers argued that the contracts purchased through the platform were merely financial exchanges and fell within the scope of federal regulation. However, Woodbury expressed the opinion that this assessment was not sufficient and concluded that Kalshi contracts on sports events are essentially the same as bets on state-licensed platforms.
The decision in Nevada is an important part of the legal process targeting Kalshi. The New York-based company is at the center of lawsuits filed in various states across the USA. In Arizona, criminal proceedings were initiated against Kalshi; The state filed 20 separate misdemeanor charges against the company for unauthorized contracts focused on sports and elections. In the ongoing case in Arizona, federal judge Michael Liburdi stated that he will combine the new case filed by the CFTC in favor of Kalshi with the existing file and announce his decision next week.
Regulatory and commercial impacts
The legal status of prediction market platforms remains a matter of debate at the state and federal levels. A federal court in Tennessee ruled in favor of Kalshi, while in New Jersey the company was allowed to continue its sports contracts. However, the decisions made in Ohio, Maryland and finally Nevada ended against the company. The measure in effect in Massachusetts is awaiting the completion of the appeal process.
In TD Cowen’s analysis, it is stated that the states are at a more advantageous point legally under current conditions. It is also stated that the legal disputes will be transferred to the Supreme Court and the decision is not expected before 2028.
The legal pressure appears to have gone beyond court proceedings. A new bill introduced by bipartisan senators aims to directly bar CFTC-regulated platforms from offering sports and similar contracts. The US National Football League (NFL) is also demanding a ban on prediction contracts that it deems unsuitable.
Kalshi, on the other hand, continues to grow regardless of legal struggles. With a financing round completed in March, the company was valued at approximately $22 billion. It was announced that the transaction volume in February reached 10.4 billion dollars. Kalshi has entered into collaboration agreements with major media and financial services platforms such as Robinhood, CNN, CNBC and Google Finance.
In the statement made by the company, it was stated that banning sports contracts on regulated platforms may shift the relevant transactions abroad. Additionally, it is stated that the measures taken are directed by those who are uncomfortable with competition.
