Kalshi files lawsuit against Nevada Gaming Control Board and New Jersey Division of Gaming Enforcement

Kalshi, a prediction market, has taken legal action against the Nevada Gaming Control Board and the New Jersey Division of Gaming Enforcement. This comes after both state regulators issued cease and desist orders to halt all sports-related contracts in their respective states. Kalshi's legal team argues that these contracts fall under the jurisdiction of the Commodities Futures Trading Commission (CFTC) and should not be regulated by state-level authorities. The team also asserts that the cease and desist orders fail to recognize that Kalshi's event contracts operate as two-sided markets trading as swaps, rather than the traditional sports-betting book model. Kalshi co-founder Tarek Mansour stated, "Prediction markets are a crucial innovation of the 21st century, and we are proud to pioneer this technology and defend it in court." Additionally, the Nevada Gaming Control Board issued a cease and desist order for Kalshi's election contracts, which were ruled legal by a US judge in September 2024, allowing them to trade freely in the country. The CFTC recently announced a shift in regulatory focus, moving away from enforcement actions and towards combating fraud in the market. This change was well-received by industry firms, who saw it as a positive step following a period of increased regulatory scrutiny under the Biden administration. The CFTC also launched an investigation into Super Bowl event contracts offered by Kalshi and Crypto.Com to ensure compliance with derivatives laws in the US, ultimately deciding not to ban the contracts.