- US District Court rules in favor of Kalshi in Nevada
- Tennessee latest state to oppose sports event contracts
- Nine states have opposed sports event contracts
This week, financial exchange company Kalshi, was granted a motion for a preliminary injunction against the District of Nevada in regards to their offering of sports event contracts. The outcome allows Kalshi to continue to operate in Nevada for the time being.
Sports event contracts, also known as prediction markets, have dominated the news cycle this year with Kalshi being at the forefront. Kalshi’s prediction markets allow customers to invest on yes or no contracts on the outcomes of various events. Examples include pop culture, economics, politics and sports.
Offering sports event contracts has drawn criticism by many states and those within the sports betting industry who claim Kalshi is offering unlicensed and unregulated sports betting markets and circumventing state gaming laws.
CFTC To Govern Designated Exchanges
Kalshi argues that sports event contracts fall under the jurisdiction of the Commodity Futures Trading Commissions (CFTC). The CFTC has authority over designated exchanges as part of the Commodities Exchange Act (CEA) which preempts state law.
Kalshi’s contests that as a federally regulated platform, states don’t have the authority to regulate their services. They also state the difference in their services with event contracts being two-sided markets that trade, compared to sportsbooks where the house can control the market.
Last year, Kalshi won a case against the CFTC where they gained permission to offer event contracts on the 2024 political elections.
By winning a preliminary injunction against the Nevada Gaming Control Board, Kalshi can continue with the “status quo” of providing prediction markets for sports until the final outcome of the case.
Tennessee Issues Letter Opposing Sports Event Contracts
This week also saw the Tennessee Sports Wagering Council issue a letter to the CFTC to remove sports event contracts from Kalshi’s offerings to Tennesseans. This includes similar offerings from other companies like Robinhood and Crypto.com.
That makes a total of nine states that have either approached the feds about taking down the markets, who have begun investigations into their legality or have issued cease-and-desist orders to Kalshi.
The states include Nevada, Tennessee, New Jersey, Ohio, Illinois, Michigan, Maryland, Massachusetts and Montana.
New Jersey, much like Nevada, issued a cease-and-desist order to Kalshi. In response, Kalshi filed a similar lawsuit against the New Jersey Division of Gaming Enforcement.
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