Kalshi advances in Nevada as Michigan targets sports contracts

• Kalshi pries away seminal legal win in Nevada
• The platform maintains its position – it is subject to federal law
• Michigan is the latest state to go after the platform

Kalshi, the future prediction market, has made a major breakthrough in its pushback against gambling regulators across the United States, and specifically in Nevada.

US District Court Judge Anthony Gordon has issued a ruling in which he outlined that the company may continue to offer its sports contracts despite a cease-and-desist letter sent to Kalshi by the Nevada Gaming Control Board, with the platform arguing that the regulator lacked a legal basis to demand the platform’s shutdown.

Kalshi notches up the important legal win in Nevada

Kalshi is hardly facing this type of pressure in the Silver State alone – as many as nine states have joined the push against the platform at a time when it has been riding the crest of demand for prediction markets on popular athletic competitions. Massachusetts and Connecticut said that they would look into these platforms.

Nevada, New Jersey, Michigan, Illinois, Maryland, Montana, and Ohio have picked a more belligerent approach altogether.

In his decision, Judge Gordon argued that the NGCB has failed to show a "likelihood of success on their countermotion for injunctive relief, so I deny their motion."

This is a major win, and it comes only a little more than a week after Kalshi said that it would pursue legal action against both the NGCB and the New Jersey Division of Gaming Enforcement.

Kalshi may have gotten all it needs to move forward unperturbed by state-level challenges, thanks to Judge Gordon’s interpretation and use of the Supremacy Clause, which basically considers federal law to overrule state oversight in certain cases, and Kalshi’s sports contracts seem to be one of those things.

Kalshi has insisted that it is subject to federal law under the Commodity Futures Trading Commission (CFTC) and does not answer to state gambling regulators, something that has been now borne out once again in legal writ.

This view is echoed by Kalshi CEO Tarek Mansour, who has been eager to make the same distinction public.

The idea is that since Kalshi operates as an exchange where contracts are formed between counterparties - whether for the outcome of a March Madness game or a political race - the platform falls under CFTC regulation as it facilitates contracts rather than set the odds itself.

Of course, gambling watchdogs have seen in this a thinly veiled move to offer sa ports betting-like mechanic without the need to pass regulatory muster.

Michigan takes a look at unlicensed sports prediction markets

Despite the strong legal footing Kalshi seems to enjoy, gambling regulators across the United States have acted in concert, launching investigations of their own. The latest to do so is the Michigan Gaming Control Board, which insisted in a statement that prediction markets "bypass" the state’s regulatory framework and raised concerns about consumer protection.

"We take consumer protection very seriously and are committed to ensuring that Michigan residents are engaging with safe and legal sports betting options," said MGCB Executive Director Henry Williams.

The regulator cited lost tax revenue as a main concern, along with the fact that platforms such as Kalshi putatively expose consumers to various risks, including identity fraud, inadequate data security, and more.

Kalshi has yet to address many of the legal challenges against it, and even though the injunction may grant it a temporary relief, the fight will carry on. Prediction markets are far from a given in the US betting and entertainment space.

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