Kalshi Sues Nevada and New Jersey Regulators

Reasons for the Lawsuit

The predictive market platform Kalshi filed a lawsuit against the Nevada Gaming Control Board and the New Jersey Division of Gaming Enforcement.

This came after the company was ordered to cease trading futures on sporting events in these states.

Kalshi argues that such contracts are regulated by the federal Commodity Futures Trading Commission (CFTC) and do not fall under state jurisdiction.

Kalshi’s Arguments

Kalshi’s legal team states:

• The company’s contracts are hedging instruments for market risks, not gambling.
• Kalshi’s activities are regulated by the CFTC, not state gaming commissions.
• Kalshi contracts represent a two-sided market, not a bookmaker model where “the house” controls bets.

Co-founder Tarek Mansour emphasized that predictive markets are a significant innovation of the 21st century, which is not yet fully understood or recognized.

Issues in Other States

A similar situation arose in Ohio, where authorities classified Kalshi’s contracts as akin to sports betting. The company was ordered to cease operations in the state by April 14.

Additionally, the Nevada Gaming Control Board demanded that Kalshi stop trading election contracts. However, in September 2024, a federal court allowed their use in the U.S.

CFTC’s Position

On February 4, interim CFTC director Caroline Pham announced a shift in regulatory approach: the commission would focus on combating fraud rather than imposing bans.

This was seen by the industry as a positive step following numerous lawsuits against crypto and financial platforms.

The CFTC also reviewed Kalshi’s Super Bowl contracts to ensure compliance with derivatives laws. Ultimately, no restrictions were imposed.