Kalshi ban in Nevada remains in effect after a state court ruling that prevents the company from offering event-based contracts during the ongoing legal battle. This is following a petition filed by regulators against any contracts relating to sport, election, and entertainment results.
The Nevada Gaming Control Board filed the application in court. Its stance is that the services offered by Kalshi fall within gambling, not financial trading.
A judge, Jason Woodbury, issued a temporary injunction. The ruling means that Kalshi cannot allow people in Nevada to trade event contracts unless it holds a gaming license, according to a report by Reuters.
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Court Extends Order, Rejects Kalshi’s Federal Argument
This ruling builds upon a temporary restraining order that is placed into effect on March 20. The temporary restraining order is valid until April 17 while the court works through the next process.
The platform argued that its contracts are financial instruments. According to the firm, the products qualified as “swaps” and were within the regulatory purview of the CFTC.
According to the company, federal law provides for the CFTC’s power to regulate these contracts. It framed its offering as a derivatives trading operation and not a gambling enterprise.
The judge dismissed this assertion in court proceedings. In his opinion, purchasing a contract based on a game outcome was no different from betting through a sportsbook.
Woodbury declared, “No matter how you look at it, it’s the same thing.” This helped in maintaining the ban on Kalshi’s service in Nevada throughout the litigation process.
Nevada Scores First Legal Win Against Kalshi
It is the first time that any state has managed to impose an active ban order against Kalshi in court. Nevada can consider this an early legal victory as other states review prediction market offerings.
Utah has also made similar moves against the industry. In February, Utah passed a law that categorizes proposition-style wagers on in-game events as gambling.
The legislation aims to prohibit such wagers on platforms like Kalshi and Polymarket. The issue is not just a matter for states but also federal agencies.
The CFTC maintains its position regarding its oversight over prediction markets and other derivative instruments. Last month, CFTC Chairman Michael Selig stated that his agency is prepared to fight legal battles to preserve its regulatory mandate.
Furthermore, he referred to prediction markets as “truth machines” at a financial technology summit. According to him, markets in which users stake money on specific outcomes give better indications of future events than surveys.
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