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Prediction market platform Kalshi has initiated legal action against the Nevada Gaming Control Board (NGCB) and the New Jersey Division of Gaming Enforcement (DGE) following cease-and-desist orders issued by both state regulators. These orders demanded that Kalshi halt all sports-related contracts within their jurisdictions, asserting that such offerings constituted unauthorized gambling activities.
Regulatory Dispute
Kalshi contends that its event contracts, which allow users to speculate on the outcomes of various events, fall under the purview of the Commodity Futures Trading Commission (CFTC) and should not be subject to state-level gambling regulations. The platform emphasizes that its markets operate as two-sided exchanges, differing fundamentally from traditional sports betting models where the house sets the odds.
Tarek Mansour, co-founder of Kalshi, stated:
“Prediction markets are a critical innovation of the 21st century, and like all innovations, they are initially misunderstood. We are proud to be the company that has pioneered this technology and stand ready to defend it once again in a court of law.”
Broader Context
This legal action follows a series of regulatory challenges faced by Kalshi. In early March 2025, the NGCB issued a cease-and-desist order concerning Kalshi’s election contracts, despite a U.S. judge ruling in September 2024 that such contracts were legal. Additionally, Robinhood, in partnership with Kalshi, ceased offering NCAA event contracts to New Jersey residents after receiving a similar order from the state’s DGE.
Implications
The outcome of this lawsuit could have significant implications for the regulation of prediction markets and the delineation of authority between federal and state agencies over such financial instruments.
