Nevada & New Jersey Gaming Organizations Demand Action Against Trading Contracts

Industry trade organizations from Nevada and New Jersey recently wrote letters to the Commodity Futures Trading Commission pleading with the federal regulator to prohibit trading platforms from offering sports events contracts.

States Demand Fair Play

The Nevada Resort Association and the Casino Association of New Jersey have written letters to the Commodity Futures Trading Commission, asking the federal regulator to bar trading platforms like Kalshi from offering sports event contracts in those states.

The concern is that the derivatives futures markets are operating unfettered in states with regulated sports betting environments and are cannibalizing the gaming business expressly meant for those licensed sports betting operators. The states’ tax coffers are also getting bypassed as the trading platforms are federally, and not state, regulated.

“Nevada stands as the nation’s home for legal gaming, and we have spent decades offering safe legal sports betting to Americans,” Nevada Resort Association president and CEO Virginia Valentine wrote in an April 3 letter to the CFTC. “Allowing for sports wagering to happen outside of state-regulated channels puts citizens at risk and endangers the critical economic support gaming provides.”

Nevada’s economy is uniquely dependent on its gaming industry, as 43% of Nevada’s gross domestic product relies on it, and 27% of its workforce is employed by the gaming industry. The letter goes on to state that gambling in the Silver State is “supporting more jobs and generating more economic output than any other sector.”

State Regulations Being Ignored

The Atlantic City-based Casino Association of New Jersey also explained how integral the gaming industry is to the economic welfare of the state. Mark Giannantonio, the president of the casino industry trade group and CEO of Resorts Casino Hotel in Atlantic City, wrote:

“As the trade association that represents New Jersey’s gaming industry, we are deeply concerned about the availability of sports events contracts, the economic impact it will have on New Jersey, and the consumer harm that may come to our citizens due to the lack of protections that the legal gaming industry is required to adhere to through state law.”

Giannantonio also pointed out there are specific rules in place in the Garden State regulations that are not being adhered to by the trading platforms, like the prohibition against betting on in-college sporting events and the ban on using cryptocurrency to fund accounts and place wagers.

“All of these policy choices were made intentionally to ensure that the legal sports betting industry in New Jersey provides a safe and responsible way to bet on sports and provide economic value to our state,” Giannantonio wrote. “In contrast, the sports events contracts that are being offered by CFTC-regulated companies provide no revenue to our state coffers, allow anyone 18 years old to bet on sports, and don’t restrict betting on collegiate wagers, a direct violation of our state laws that New Jersey citizens voted on.”

In addition to Nevada and New Jersey, Kalshi has been issued cease-and-desist orders from Maryland, Ohio, Illinois and Montana. However, the New York-based trading platform recently sued to continue operating in Nevada, New Jersey, and other states that have filed C&D orders and won a temporary restraining order and preliminary injunction against those state gaming regulators.

The Commodity Futures Trading Commission has scheduled a roundtable discussion on the topic later this month.