One of the companies that offers predictive market contracts for sporting events is defying a Nevada judge barring it from operating in the state.
In a statement Tuesday, Nevada Gaming Control Board Chairman Mike Dreitzer said the board had reached agreements in principle with Robinhood and crypto.com to cease operations in the state pending a court hearing. But Dreitzer added that KalshiEx LLC, which is involved in a lawsuit with the board, the Nevada Gaming Commission and former and current gaming regulators, did not reach a settlement and continues to offer contracts from its website.
U.S. District Judge Andrew Gordon on Monday granted a state motion to dissolve a preliminary injunction that had allowed Kalshi to offer contracts for sporting events until the case was decided in court.
Contracts are yes-or-no propositions similar to sports betting. The control board has interpreted them as sports betting and said Kalshi was operating illegally without a gambling license.
After the control board issued a cease and desist order in March, Kalshi responded with a lawsuit. That’s when Gordon stepped in and ordered the preliminary injunction that allowed Kalshi to continue his business.
The company has continued to offer contracts in Nevada, but earlier this month in a court hearing, Gordon said he was leaning toward dissolving the injunction. On Monday, he did.
Judge’s order
In his 29-page ruling issued Monday, Gordon wrote, “Kalshi’s interpretation would require all sports betting nationwide to fall under the jurisdiction of the (Commodity Futures Trading Commission) rather than the states and Indian tribes. That interpretation upends decades of federalism in gaming regulation, runs counter to Congressional intent behind the law.” (Commodities Exchange Act)
Kalshi argues that the federally regulated CFTC has greater authority than state gaming regulatory bodies across the country.
Dreitzer’s message to licensees Tuesday said two companies that have offered or attempted to offer sports prediction contracts in the state have agreed not to write them here. But Kalshi has not.
“In light of Judge Gordon’s decision, the Board and Robinhood have reached an agreement in principle whereby Robinhood has agreed to cease offering new sporting event contracts in the state of Nevada, pending further proceedings. Unlike both Robinhood and crypto.com before them, Kalshi has declined to reach an agreement with the Board to cease operations in Nevada pending further legal proceedings, despite being very clear. a reasonable opportunity to do so has instead begged Judge Gordon to stay his decision pending its appeal, Dreitzer said.
“The board will vigorously oppose that motion and will continue to expeditiously pursue a path through the courts to stop Kalshi’s illegal conduct.”
Emergency movement
Kalshi on Tuesday filed an urgent motion to expedite a hearing by Gordon to overturn his dissolution order. Gordon said responses to that motion are due Dec. 9.
Kalshi indicated in his motion that if Gordon did not consider the stay by the end of the business day Wednesday that it would take the case to the Ninth Circuit Court of Appeals.
“This case presents complex legal issues that have divided courts across the country,” Kalshi’s motion says. “As this court recognized, multiple appeals regarding these issues are already pending, both in the Ninth Circuit and other circuits. These appellate proceedings will resolve the question of whether states may prohibit Kalshi’s event contracts even if they are overseen by the CFTC. And the issues raised, both here and elsewhere, are “serious legal questions” of the kind that deserve to be stayed.”
Representatives for the CFTC did not respond to a request for comment.
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