Kalshi secured another victory in federal court in Nevada over its sports prediction markets, as a judge dismissed Nevada’s motion to dismiss its lawsuit. Following Kalshi’s lead, Crypto.com also filed a lawsuit against the Nevada Gaming Control Board (NGCB) in response to a cease-and-desist letter sent to the company.
Nevada issued cease-and-desist letters to both Kalshi and Crypto.com back in April, alleging that their expansion into sports event contracts was in violation of Nevada sports betting laws.
Kalshi responded by filing a lawsuit and was granted a preliminary injunction order to allow it to continue operating in the state. Nevada then filed a motion to dismiss the case, which was rejected by a judge on June 5.
Event contracts governed by CFTC, not state regulators
Nevada’s motion to dismiss was based on the argument that although Kalshi is under the jurisdiction of the Commodity Futures Trading Commission (CFTC), this does not mean it can violate state gambling laws.
Kalshi has long argued that the Commodity Exchange Act (CEA) means that its operations are regulated at the federal level by the CFTC and not state regulators.
The judge sided with Kalshi, noting the company had “demonstrated a likelihood of success on the merits of its claim that the CEA preempts Nevada gaming laws with respect to Kalshi’s conduct as a CFTC-designated contract maker”.
Nevada’s case also argued that Kalshi had previously said that Congress, when writing the CEA, did not intend to permit sports event contracts. The judge, however, did not entertain this idea and again stated that the CEA preempts state laws.
“For now, it suffices to say that Kalshi has plausibly alleged the CEA preempts Nevada gaming laws for the reasons outlined in my preliminary injunction order.”
Kalshi CEO Mansour celebrates another win
The latest ruling again means that Kalshi can continue offering its sports event contracts to residents in Nevada. CEO Tarek Mansour celebrated the latest victory, posting on X, “Kalshi secured another big legal victory today in Nevada,” he said. “It feels like I am saying this every week.
“Thank you to our CLO Rick (general counsel Rick Heaslip), litigation team, the US Constitution, my mother for raising me to be stubborn, melatonin, my girlfriend for dealing with the sleepless nights, and our dear traders whose volumes keep growing on Kalshi. We keep marching.”
The ruling effectively consolidates Kalshi’s position as offering legal sports betting in all 50 states.
Nevada drafts NRA into firing line
The court case remains open, however, and Nevada has added the Nevada Resorts Association (NRA) as a co-defendant in the case. The organization can bring extra force to the case against Kalshi.
In allowing the NRA to be part of the case, the court said, “The NRA’s members have significantly protectable interests in their Nevada gaming licenses that they have spent substantial sums to obtain, maintain, and protect.”
“If Kalshi prevails in this case, the NRA members likely would be placed at a considerable competitive disadvantage because Kalshi and others like it would not have to comply with Nevada’s comprehensive gaming laws, including prohibitions on bettors under 21 and types of bets allowed.”
In addition to the 180 sportsbooks located across the state, Nevada was also one of the first states to launch mobile sports betting in 2010. Bettors must first register at the sportsbook’s physical location in the state before being able to bet online, however.
Perhaps due to this, betting handle has fallen in Nevada despite rising across the US as a whole. In 2023, betting handle was at $8.26 billion, which fell to $7.9 billion last year. Despite this drop, revenue generated by licensed sportsbooks rose slightly, from $481.4 million up to $482.1 billion.
Crypto.com also files lawsuit in Nevada
In response to the cease-and-desist letter issued to the company, Crypto.com has also filed a lawsuit in Nevada and will be hoping for a similar ruling.
Crypto.com started trading sports event contracts in December last year and was initially ordered to remove the markets by the CFTC, however, it has continued to expand offerings and introduced single-match winner markets on a range of sports, including the NBA, NFL, and MLB. Kalshi has followed, and sports markets now account for more than 80% of all markets on the platform.
Crypto.com is using the same argument that has been successful with Kalshi, that the CFTC “has exclusive jurisdiction to regulate derivatives contracts on federally registered markets.”
The platform called on the court to ”declare that states, including the State of Nevada, lack legal authority to regulate the offering or listing of event contracts” and award “just and proper” relief.
Adam is an experienced writer with years of experience in the gambling industry. He has worked as a content writer and editor for five years on sites such as Oddschecker, CoinTelegraph and Gambling Industry News, bringing excellent knowledge of the world of sports betting and online gambling. Adam focuses on emerging stories in the ever changing landscape of betting in the US. Read the latest on prediction markets, changing legislation, and sweepstakes.
