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Nevada became the first state to formally push back against the emergence of sports prediction markets, but other state gaming regulators say they share similar concerns about the genre.
The Nevada Gaming Control Board (NGCB) issued a cease-and-desist order to prediction exchange market Kalshi late on Tuesday (March 4), alleging that the company's contracts on sporting events and political elections are unlawful under state law and instructing Kalshi to cease offering them by March 14.
The control board also pointed out that even licensed sportsbooks in Nevada are not permitted to accept wagers on elections, and therefore the contracts “are in direct violation of Nevada’s public policy”.
“Every sports pool in Nevada must undergo an extensive investigation prior to licensing, must adhere to strict regulation once licensed, and must pay all applicable taxes and fees,” said NGCB chair Kirk Hendrick in a statement.
“Any unlawful attempts to circumvent Nevada’s right to regulate gaming activity within its borders will be met with the full force of criminal and civil penalties,” Hendrick said.
As a financial product subject to federal regulation by the Commodity Futures Trading Commission (CFTC), the sports event contracts offered by Kalshi and Crypto.com are currently available in all 50 U.S. states, including states where no form of traditional sports betting is legally permitted.
Regulators from other states expressed similar concerns to Nevada during a panel discussion at the Gaming Law, Compliance and Integrity Bootcamp hosted by Seton Hall Law School on Monday.
“I’ll just say generally, we’re interested in it, and we are watching and waiting to see,” said Stephanie Maxwell, deputy director and general counsel for the Tennessee Sports Wagering Council.
Much like Nevada, Tennessee first took notice of the election contracts that emerged in the run-up to November’s general election.
“I’m sure this is the case in many states, but in Tennessee, it’s a misdemeanor to wager on an election, and so, there’s that issue, in addition to all the sports betting, so, we haven’t taken any action, but we are very interested to see what happens.”
“They initially didn’t call them sports betting, and then they just got so bold that they were like, yep, you can wager on sports,” echoed Louis Rogacki, deputy director and assistant attorney general with the New Jersey Division of Gaming Enforcement.
Rogacki also pointed out that in addition to elections, the contracts run afoul of other New Jersey's state-level sports-betting prohibitions, including a state constitutional ban on accepting wagers on collegiate events held in the state of New Jersey, such as a NCAA Men’s Basketball Tournament regional final to be held in Newark this year.
“Kalshi is taking wagers, but no New Jersey operator can take them, otherwise you are going to be getting a call from me,” he said.
“Unless Congress passes legislation to make a federal structure here, this isn’t legislation the CFTC is proposing, so we have lots of questions,” Rogacki added. “There are more questions than answers now.”
In a post on X in response to the Nevada letter, Kalshi co-founder and CEO Tarek Mansour said that the company has always been committed to doing things “the right way” and working within a regulated framework, even going to federal court to do so rather than circumventing regulations or moving offshore.
“After the election, we were convinced that the value of prediction markets was now obvious to everyone, and that the regulatory battle for legal prediction markets was over… We were right, except for the everyone part,” Mansour said.
“While we are disappointed to see the letter from the Nevada Gaming Commission ... Kalshi will stay committed to our approach and keep paving the way for regulated prediction markets to thrive in the U.S.,” he added.
