Kalshi, a prediction market platform, has taken legal action against the Nevada Gaming Control Board and the New Jersey Division of Gaming Enforcement after receiving cease and desist orders to halt its sports-related contracts in those states.
The company argues that these contracts fall under the jurisdiction of the Commodity Futures Trading Commission (CFTC), meaning state regulators lack the authority to intervene.
Kalshi’s legal team further contends that its event contracts are structured as two-sided markets, functioning as swaps rather than traditional sports betting models where the house takes control. Co-founder Tarek Mansour emphasized the importance of prediction markets as an innovative financial tool and expressed the company’s commitment to defending their model in court.
In addition to sports-related contracts, Kalshi faced a cease and desist order from the Nevada Gaming Control Board concerning its election contracts. A US judge had previously ruled in September 2024 that these contracts are legal, allowing them to continue trading in the country.
Meanwhile, the CFTC has shifted its approach under new leadership. Acting director Caroline Pham announced that the agency would no longer focus on regulation through enforcement actions, instead prioritizing the fight against fraud.
This shift has been well-received by the industry, which has faced numerous lawsuits and enforcement actions during the current administration. Despite probing Kalshi’s Super Bowl event contracts alongside Crypto.com, the CFTC ultimately refrained from taking any action to prohibit the contracts.
Editorial Team
Reporter at Coindoo
Source: https://coindoo.com/prediction-market-platform-challenges-state-regulators-over-sports-betting-dispute/