The saga of exchange-based markets seeking to offer sports betting has taken another turn as the Nevada Gaming Control Board (NGCB) ordered Kalshi to cease operating in the state.
Kalshi made waves in 2024 when it emerged victorious in years-long litigation with the Commodity Futures Trading Commission (CFTC) in the fight to launch election betting markets. Later, the exchange began dipping its toe in sports, offering markets for the Super Bowl.
Tuesday, the NGCB told the exchange that “event-based contracts” on sports and elections “is unlawful in Nevada, unless and until approved as licensed gaming by the Nevada Gaming Commission.”
“While we’re disappointed with the Commission’s assessment, Kalshi has always held the utmost respect for regulators and the regulatory process,” a Kalshi spokesperson said in a statement to Front Office Sports. “We’ve been a federally regulated exchange for over four years and a federally regulated clearinghouse for about six months. We are proud to have paved the way for prediction markets to thrive in the U.S. We look forward to a swift resolution to this matter and to ensuring that Americans continue to have access to safe, regulated, and transparent prediction markets.”
As of Wednesday morning, Kalshi remains up in Nevada. It has 10 days to comply with the cease and desist order. Presently, sports markets available on Kalshi include futures on the NBA championship, March Madness, and Champions League.
“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.” NGCB Chairman Kirk Hendrick stated in the body’s demand order to Kalshi. “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.”
This type of fight was inevitable as soon as Kalshi started launching sports markets. Since the Supreme Court overturned the Professional and Amateur Sports Protection Act in 2018, sports gambling has been regulated—and taxed—by individual states.
Kalshi, as it said in its statement, is federally regulated. Whereas legal sports betting is unavailable in about a dozen U.S. states, including Texas and California, Kalshi is available in all 50 states and not subject to the same tax structures as sportsbooks. In states where sports gambling is legal, local governments have an obvious incentive to stave off competition and keep the status quo.
When Crypto.com, a different exchange, first launched Super Bowl betting, the CFTC requested that it pause pending a regulatory review of the market. Crypto.com did not immediately comply with the request, as the CFTC was set to flip from majority Democrat to Republican when President Donald Trump took office.
When Kalshi partnered with Robinhood for Super Bowl markets last month, the CFTC asked Robinhood to “not permit customers to access” sports event contracts. Robinhood complied, taking the markets down.
The CFTC did not immediately respond to an inquiry from FOS on Wednesday asking whether the situation with Kalshi and Nevada should fall under state or federal jurisdiction, or about a timetable of its regulatory review on sports markets from earlier this year.
