Kalshi faces 14-day shutdown in Nevada over gambling laws

Kalshi, a prediction market company, has faced a temporary setback in Nevada. A state judge issued a temporary restraining order, blocking the company from operating for 14 days. The decision follows concerns that Kalshi’s event contracts might violate Nevada’s gambling laws.

On Friday, Carson City District Court Judge Jason Woodbury granted a temporary restraining order, siding with the Nevada Gaming Control Board’s motion to block Kalshi. This comes after the company offered event contracts related to sports, elections, and entertainment, which Nevada regulators view as a form of unlicensed gambling. 

The court ruling states that Kalshi is prohibited from offering such contracts in Nevada, as these are considered “sports pools” under state law. Kalshi, however, has not responded to the ruling.

Nevada Gaming Control Board Chair Mike Dreitzer emphasized the state’s responsibility to protect the public, asserting that prediction markets like Kalshi could facilitate illegal gambling. 

Kalshi had argued that its contracts fall under the jurisdiction of the Commodity Futures Trading Commission (CFTC), not Nevada’s gaming regulations. The company has fought similar accusations in other states, asserting that its activities are federally regulated. 

However, Judge Woodbury rejected Kalshi’s defense, stating that the legal authority currently favors Nevada’s stance. The court’s decision sets a precedent for ongoing legal battles regarding prediction markets and their regulation across state lines.

Moreover, Kalshi is currently engaged in multiple legal disputes with state regulators. This includes a case in Massachusetts, where a state judge banned the company from offering sports event contracts, though this ban was later lifted on appeal. 

Additionally, Arizona has filed criminal charges against Kalshi, accusing the company of running an illegal gambling operation. Kalshi CEO Tarek Mansour has labeled these charges as “total overstep.”