Prediction market platform Kalshi has taken its legal battle with state gaming regulators to the federal level by filing lawsuits against the Nevada Gaming Control Board and the New Jersey Division of Gaming Enforcement. The platform received cease and desist orders from both agencies, but it is challenging their authority, arguing that it has the federally granted right to offer event contracts.
Kalshi believes that Congress has the exclusive right to regulate platforms like itself through the Commodity Futures Trading Commission (CFTC), and that this federal authority supersedes state gaming laws. The company asserts that its sports prediction markets are not gambling but financial trading, operating as a two-sided market where prices are determined by market forces.
Despite the legal showdown with regulators, Kalshi has seen significant trading volume on its platform, particularly surrounding the NCAA Tournament. The platform has expanded its sports offerings for March Madness, triggering the regulatory actions from Nevada and New Jersey. The dispute has now spread to Ohio, where the Casino Control Commission issued a cease and desist letter to Kalshi, Crypto.com, and Robinhood.
Kalshi has attempted to reach a compromise with New Jersey regulators but without success. The company raised concerns about technical issues with geofencing specific markets and warned that ceasing operations in certain states could jeopardize its status with the CFTC. Kalshi’s CEO remains confident in their legal challenge, stating that they have successfully fought similar battles in the past and will continue to defend their platform’s operations.
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