Nevada Judge Extends State Ban on Kalshi
A Nevada state judge extended the ban on the prediction market company Kalshi, saying it cannot allow its services in Nevada.
Judge Jason Woodbury stated that the event contracts that Kalshi provides are “indistinguishable” from typical sports betting that can be done at state-regulated sportsbooks.
The ruling also signals that Woodbury would grant the Nevada Gaming Control Board’s (NGCB) preliminary injunction request. The recent ruling is the first of its kind, as Nevada is the only state to ban prediction market operators. There was another recent ruling in favor of Kalshi, allowing it to allow event contracts in the state of New Jersey.
Woodbury ruled that, under Nevada law, the event contracts Kalshi offers constitute gambling.
Preparing for a preliminary injunction
The April 3 ruling extended a 14-day temporary restraining order (TRO) issued on March 20. Woodbury signaled he would issue another TRO while he finalizes the language of the Preliminary Injunction. That injunction would bar Kalshi from offering event contracts in Nevada until the case proceeds.
Geofencing issue
Woodbury gave Kalshi until May 4 to integrate geofencing technology so that Nevada residents would not be able to access the prediction market platform.
He said Kalshi could inquire about extending the May 4 deadline, but the company would have to provide a complete explanation for the extension. He stated in the ruling: “Any request for an extension shall include an explanation of the degree to which geolocation or geofencing measures have been implemented, the progress which has been made regarding any implementation that has not yet been completed, the remaining tasks to be completed, and an estimate of the time necessary to complete those tasks.”
Kalshi’s argument
Kalshi has argued that its event contracts are subject to federal jurisdiction and that the Commodity Futures Trading Commission (CFTC) regulates them. This is the same argument that was in a federal appeals court, where a three-judge panel ruled in favor of the CFTC, allowing Kalshi to offer its services in New Jersey. Another ruling was in Kalshi's favor in Tennessee.
While Kalshi has won two rulings, they lost the one in Nevada, and things do not look good with them in other states. Courts in other states, such as Arizona, Michigan, and Maryland, have sided with state gambling regulators, who share NGCB's view that event contracts are the same as sports betting.
Kalshi and other prediction market companies are receiving support from the CFTC at the federal level. The CFTC has current lawsuits filed in Illinois, Connecticut, and Arizona, arguing that the state’s attempts at prediction market regulation encroach on its authority to do so under the Commodity Exchange Act.
Kalshi not being singled out
Kalshi is not being singled out in Nevada. On March 26, a preliminary injunction was granted against Coinbase by the NGCB. Nevada now has rulings favoring the NGCG against Polymarket, Crypto.com, Robinhood, Kalshi, and Coinbase.
