Kalshi resisting judge’s order to stop writing sports contracts in Nevada
One of the companies offering prediction market contracts for sporting events is resisting a Nevada judge’s ruling that prevents it from operating in the state.
In a Tuesday notice, Nevada Gaming Control Board Chairman Mike Dreitzer said the board had reached agreements in principle with Robinhood and crypto.com to cease operations in the state pending a court hearing. But Dreitzer added that KalshiEx LLC, which is embroiled in a lawsuit with the board, the Nevada Gaming Commission and past and present gaming regulators, didn’t reach an agreement and continues to offer contracts from its website.
U.S. District Court Judge Andrew Gordon on Monday granted a state motion to dissolve a preliminary injunction that had allowed Kalshi to offer contracts on sporting events until the case was decided in court.
Contracts are yes-or-no propositions that are similar to sports bets. The Control Board has interpreted them as sports wagers and said Kalshi was operating illegally without a gaming license.
After the Control Board issued a cease-and-desist order in March, Kalshi responded with a lawsuit. That’s when Gordon stepped in and ordered the preliminary injunction that enabled Kalshi to continue to operate.
The company has continued to offer contracts in Nevada, but earlier this month in a court hearing, Gordon said he was leaning toward dissolving the injunction. On Monday, he did.
Judge’s order
In his 29-page ruling issued Monday, Gordon wrote, “Kalshi’s interpretation would require all sports betting across the country to come within the jurisdiction of the (Commodity Futures Trading Commission) rather than the states and Indian tribes. That interpretation upsets decades of federalism regarding gaming regulation, is contrary to Congress’ intent behind the (Commodities Exchange Act) and cannot be sustained.”
Kalshi contends that the federally regulated CFTC has greater authority than state gaming regulatory bodies across the country.
Dreitzer’s notification to licensees Tuesday said two companies that have offered or attempted to offer sports prediction contracts in the state have agreed not to write them here. But Kalshi hasn’t.
“In light of Judge Gordon’s ruling, the board and Robinhood have reached an agreement in principle under which Robinhood has agreed to cease offering new sports event contracts in the state of Nevada, pending further proceedings. Unlike both Robinhood and crypto.com before them, Kalshi has declined to reach an agreement with the board to stop operating in Nevada pending further proceedings, despite (Monday’s) clear legal ruling and the fact that they were provided a very reasonable opportunity to do so. Kalshi instead has asked Judge Gordon to stay his ruling pending its appeal,” Dreitzer said.
“The board will vigorously oppose that motion and will continue to expeditiously pursue a path through the courts to stop Kalshi’s unlawful conduct.”
Emergency motion
Kalshi on Tuesday filed an emergency motion to expedite a hearing from Gordon to stay his dissolution order. Gordon said responses to that motion are due Dec. 9.
Kalshi indicated in its motion that if Gordon didn’t consider the stay by the end of the business day Wednesday that it would take the matter to the Ninth Circuit Court of Appeals.
“This case presents complex legal issues that have divided courts across the country,” Kalshi’s motion says. “As this court recognized, multiple appeals concerning these issues are already pending, both in the Ninth Circuit and other circuits. These appellate proceedings will resolve the question of whether states may ban Kalshi’s event contracts even though they are overseen by the CFTC. And the issues raised, both here and elsewhere, are ‘serious legal questions’ of the sort that merit a stay.”
Representatives of the CFTC did not respond to a request for comment.
Contact Richard N. Velotta at rvelotta@reviewjournal.com or 702-477-3893. Follow @RickVelotta on X.
