Prediction market platform Kalshi has filed lawsuits against Nevada and New Jersey regulators after receiving cease-and-desist letters regarding sports contracts.
Kalshi's Legal Action
Kalshi has taken legal action against the Nevada Gaming Control Board and the New Jersey Division of Gaming Enforcement after receiving cease-and-desist letters demanding the halt of all sports-related contracts. Regulators cited unauthorized sports wagering operations.
Company's Arguments
Kalshi argues that their event contracts are covered by the federal Commodity Futures Trading Commission (CFTC) and hence not subject to state regulation. Kalshi's co-founder, Tarek Mansour, stated that prediction markets are a critical innovation of the 21st century and the company is ready to defend them in court.
Government Agencies' Response
The cease-and-desist order also targeted election-related contracts by Kalshi. However, a U.S. judge ruled in September 2024 that these contracts were legal, allowing them to trade freely across the United States. On Feb. 4, acting CFTC director Caroline Pham announced a regulatory shift focusing on fraud prevention.
Kalshi continues its efforts to legitimize its operations in new markets with federal regulatory support.
