The Nevada Gaming Control Board (NGCB) has issued a cease-and-desist order to prediction market operator Kalshi, demanding the company halt its activities in the state by 5 PM on March 14. The NGCB stated that event-based contracts involving elections and sports are “unlawful in Nevada unless and until approved as licensed gaming by the Nevada Gaming Commission.” This includes a prohibition on licensed sports pools accepting wagers on election outcomes. Kalshi, a leader in the prediction market sector, provides various event-based contracts, with political betting becoming particularly popular during the 2024 election cycle due to federal restrictions on election-related wagers by sportsbooks.
Nevada’s Strict Stance on Internet Betting
The NGCB’s decision has come under scrutiny, as it follows calls by Rep. Dina Titus (D-Nevada) for a deeper examination of prediction markets’ offerings. Titus expressed concerns that contracts on sports outcomes might act as a loophole to legalize sports betting in states where it remains unauthorized. Companies like Kalshi and others offering such contracts are regulated by the Commodities Futures Trading Commission (CFTC), allowing them to operate across all 50 states — a freedom unavailable to sportsbooks that answer to individual state regulators. Nevada, known for its firm stance against alternative forms of wagering, has yet to approve internet casinos, does not have a state lottery, and restricts daily fantasy sports. Even large platforms like DraftKings and FanDuel do not operate in Nevada due to requirements for in-person registration for mobile sports wagering accounts.
Potential Legal Challenge and Future Prospects
As of now, Kalshi has not formally responded to the NGCB’s order but could potentially contest the decision. The company argues that its contracts are derivatives, not bets, as they function as financial instruments based on specific outcomes. For instance, participants can purchase binary options such as “yes” or “no” contracts tied to events. A possible middle ground could involve Kalshi continuing its operations in Nevada without offering election and sports-related contracts. The platform provides a wide range of derivatives tied to events like economic releases, weather, and awards shows. However, neither Kalshi nor Nevada regulators have indicated that such a compromise is being considered.
