Nevada Ramps Up War with Kalshi Over Prediction Markets
The Nevada Gambling Control Board has referred Kalshi to a district court in an escalating war with prediction markets.
The NGCB wants Kalshi held in contempt of a May order banning the prediction market from offering event contracts on sports and other markets.
At a Glance:
- Nevada Gaming Control Board asks court to hold Kalshi in contempt
- Nevada filed a lawsuit against Kalshi in February
- A judicial order preventing event contracts came in in May
- Prediction markets continue to have CFTC backing
Kalshi 'causing severe and ongoing harm,' says court filing
In the filing recorded in the First Judicial District Court for the State of Nevada, the board accuses Kalshi of offering “sports betting” in the state.
“Every day, Kalshi takes in hundreds of millions in wagers on such events as the NBA Finals, the Stanley Cup Finals, and FIFA World Cup,” the filing reads. “At the same time, Kalshi is severely harming the gaming industry because it refuses to follow the same rules as its licensed sportsbook competitors, who actually geofence. This is an intolerable state of affairs.”
Nevada was one of the first U.S. states to legalize online sportsbooks for betting on football and other markets.
Online sports betting sites are licensed state by state. However, prediction markets like Kalshi offer “event contracts,” rather like share-dealing platforms. That means the Commodity Futures Trading Commission regulates them, not a state gaming regulator.
Home World Cup likely to trigger hundreds of millions in sports bets
The war of words comes at the start of the FIFA World Cup, co-hosted by the U.S. this summer. Regulated online sportsbooks in Nevada and across the U.S. are expected to bring in hundreds of millions in bets.
However, gaming commissions in states like Nevada argue that prediction markets are invading the space reserved for regulated sportsbooks.
Traditionally, prediction market sites offered event contracts on election winners or share prices. However, they now offer huge sports markets on everything from the Super Bowl to the World Cup.
Prediction markets use more transparent blockchain technology. Customers set the prices instead of a sports odds compiler. Plus, you can view where the money is going and the total volume.
For example, the total volume of trades on the men’s World Cup is currently $283 million, all easily visible on the site.
Kalshi’s geofencing tool is 'notoriously unreliable'
Prediction market sites are working to geofence some of their contracts in line with state gaming laws. For example, Kalshi is introducing a tool that will omit certain sports contracts from its site based on your state.
That didn't appease the Nevada Gaming Control Board, however.
In its filing, the NGCB called the geofencing solutions “notoriously unreliable,” and accused Kalshi of using delaying tactics.
Despite Kalshi’s ongoing fights with states, its fortunes continue to grow. Following a recent investment, Kalshi was valued at $22 billion, making it the biggest prediction market in the U.S.
