Nevada Takes Action Against Sports Events Trading Platform

The Nevada Gaming Control Board issued a cease-and-desist order last week against KalshiEX LLC, prohibiting the company from offering prediction markets on sporting events, citing state law.

Bookmakers Only in Nevada

Commodities trading platforms like Kalshi have branched out into election markets and sporting events, which are currently deemed lawful by federal law. Although the Commodity Futures Trading Commission (CFTC) has been fighting the firm in federal court, Kalshi announced it was taking Super Bowl contracts this past February, and a spokesperson confirmed it had launched 38 sports-related markets in the weeks leading up to the NFL championship game.

This caught the attention of Nevada’s Gaming Control Board, and it recently submitted a cease-and-desist letter stating:

“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,” NGCB Chairman Kirk Hendrick said in a statement. “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.”

The order also stated that any prior violations are subject to criminal and civil penalties, while adding, “Future unlawful activity will be deemed willful violations.”

The nuanced difference between sportsbooks and trading platforms is that the former is accepting the wagers and the risk while the latter acts as an agent with the users “betting” against each other with the trading platforms taking a commission but do not pay winnings out of pocket nor do they take the losses.

Presidential Support

The Commodity Futures Trading Commission will have a distinctly new look with the new administration and will likely be more amenable to companies like Kalshi offering futures contracts on election results and sporting events. This change of heart comes with the new board members and the presence of Donald Trump Jr. joining Kalshi as a strategic advisor.

The president’s son posted on X after joining the firm:

“On Election night at Mar-a-Lago, while biased outlets called the race a coin toss, my family and close friends used the prediction market @Kalshi to know we won hours ahead of the fake news media.

“I immediately knew I had to contribute to their mission. Today, I am proud to announce that I am joining Kalshi as a strategic advisor.

The Kalshi team has worked hard, sued the Biden administration, and achieved the impossible feat of becoming the first legal prediction market in the US. I’m excited to be a part of what they’re building.”

Competitors like Crypto.com and Robinhood have also explored the futures trading markets in non-traditional arenas like elections and sports. The retooled CFTC board recently announced it would hold a prediction markets roundtable after the public comment period is over.

“This roundtable is a necessary first step in order to establish a holistic regulatory framework that will both foster thriving prediction markets and protect retail customers from binary options fraud such as deceptive and abusive marketing and sales practices,” acting Chair Caroline Pham said in a release. “The CFTC appreciates the proactive engagement from market participants and looks forward to working together to support innovation while ensuring robust customer protection in our markets.”