Kalshi asked to exit Nevada by local gambling regulator

The Nevada Gaming Control Board (NGCB) has gone on the offensive against Kalshi, a prediction market platform, that has a free hand at operating in the entirety of the United States owing to its unique business model that, although similar to betting in some regards, falls under the purview of the Commodity Futures Trading Commission (CFTC).

Kalshi getting under fire in Nevada, after regulator issues cease-and-desist order

However, the NGCB has agreed to disagree with the company, issuing a cease-and-desist letter to KalshiEX LLC, dba Kalshi, notifying the company that event-based contracts are in fact unlawful in the Silver State.

The regulator said that sporting events and election outcomes cannot be featured as part of Kalshi’s prediction market platform, and the only way that would be possible would be through a license obtained from the Nevada Gaming Commission.

The letter further outlined specific violations of Nevada Revised Statutes and Nevada Gaming Commission Regulations that the company is alleged to have violated by operating the way it has been. The NGCB has given the company until 5:00 pm on March 14, 2025, to exit the market. The regulator’s Chairman, Kirk Hendrick, had this to say on the occasion:

"Every sports pool in Nevada must undergo an extensive investigation prior to licensing, must adhere to strict regulation once licensed, and must pay all applicable taxes and fees. Any unlawful attempts to circumvent Nevada’s right to regulate gaming activity within its borders will be met with the full force of criminal and civil penalties."

This is not the first time Kalshi has been assailed in such a way. Prior to the US presidential election in 2024, the CFTC tried to block Kalshi from offering its prediction markets on the outcome of the race on at least two occasions. Kalshi went to court and won against the regulator, but the NGCB has taken up matters in its own hands.

However, the NGCB may not leave things there either. According to the regulator’s boss, past unlawful action is similarly subject to future criminal and civil penalties, and any future unlawful behavior would only add to the issues, deemed "willful violations."

Kalshi’s legality is not too easily defined

The legality of prediction markets is still subject to fierce debate. There seems to be a good number of legal experts who argue that Kalshi and other prediction markets do not meet the requirements for a standard sports gambling company, simply because they do not set the odds themselves.

However, the regulator in the Silver State seems to disagree. How things turn out down the road remains to be seen. Would Kalshi exit Nevada and acquiesce to temporary defeat to the regulator, or would it seek to challenge the Nevada Gaming Control Board as it did the CFTC?

Recently, there has been a strong pushback from various gambling industry stakeholders against prediction markets. Tribal operators and leaders have said that prediction markets undermine tribal gaming, and the American Gaming Association voiced a similar concern over the regulated gambling market.

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