In a release, the NGCB said that offering sports and election contracts “is unlawful in Nevada, unless and until approved as licenced gaming by the Nevada Gaming Commission”. Kalshi is to cease operations in the state by 5pm 14 March or be subject to legal action. Even past operations, the board said, “remains subject to criminal and civil penalties”.
The letter represents the first action taken against prediction markets at the state level. Last fall, Kalshi survived a legal challenge in federal court from the Commodities Futures Trading Commission (CFTC). That has allowed the platform, and others such as Crypto.com, to continue operating, although future challenges could be coming.
Federal officials originally sought to bar Kalshi and others from offering election markets. Those efforts were unsuccessful, and before the November election the platforms took in billions worth of contracts. But in January, Kalshi began offering sports contracts, which has caused the gaming industry to take notice.
Notably, the NGCB mentioned both election and sports contracts as being illegal in the state. It said that “even licenced sports pools in Nevada are prohibited from accepting wagers” on elections. This could be another angle for state regulators to pursue moving forward.
In a statement on X, Kalshi CEO Tarek Mansour said the company was “disappointed” by the letter, but vowed to “stay committed to our approach and keep paving the way for regulated prediction markets to thrive in the US”.
“To the prediction markets community: last year proved how important our mission is,” he continued. “We have fought hard to get to this point, but the job’s not finished and the work will continue till prediction markets achieve their full potential”.
Kalshi accused of circumventing law
Board chair Kirk Hendrick, who will step down from the role at the end of Nevada’s legislative session, said that all “attempts to circumvent Nevada’s right to regulate gaming activity within its borders” will face legal action.
“Every sports pool in Nevada must undergo an extensive investigation prior to licencing, must adhere to strict regulation once licenced, and must pay all applicable taxes and fees,” he continued.
His comments are similar to those submitted to the CFTC by several tribal and commercial groups last month. The commission will host a roundtable on prediction markets on April 30, but the exact details and scope of the meeting are unknown.
The American Gaming Association (AGA) in its submission touched on many of the same arguments as Hendrick. It argued that “the introduction of a ‘national’ sports betting product severely undermines state regulatory authority” and impacts tax revenue.
“By circumventing the important regulatory protections implemented by states, these platforms also raise the prospect of considerable consumer and marketplace harms,” the AGA wrote. “Legal sportsbooks have regulatory requirements covering age verification and access, Know Your Customer (KYC) and anti money laundering (AML) protocols, self-exclusion, and integrity monitoring among many other important areas of compliance, which these contracts and current regulatory oversight by the CFTC fail to address.”
Original article: https://igamingbusiness.com/gaming/gaming-regulation/kalshi-cease-desist-nevada/
