Kalshi has been forced to exit a state in the US for the first time, temporarily blocking access to its sports markets in Nevada after a judge issued a temporary restraining order (TRO) against the company. Legal battles are intensifying over the platform’s controversial sports prediction markets, and a new lawsuit has named Kalshi’s co-founders individually.
The Nevada Gaming Control Board (NGCB) announced that the state had issued a TRO on Friday. In a press release, Chairman Mike Dreitzer stated, “Kalshi has repeatedly stated that its operations are legal in 50 states, which is clearly not true.”
“Prediction markets, to the extent they facilitate unlicensed gambling, are illegal in Nevada, and we have a statutory duty to protect the public. We want people in the state to wager safely at a licensed book.”
The TRO is in place until April 3, when a hearing will take place. Kalshi’s exit from the state follows a judge’s rejection of the company’s request for an administrative stay, which would have allowed it to continue operations while the case is ongoing.
Kalshi Confident in Legal Position
Kalshi sent an email to users on Saturday, confirming that it will restrict users in Nevada from accessing sports, entertainment, and election markets.
The email stated, “We’ll cut to the chase. Due to a temporary court order, our markets related to sports, entertainment, and elections are being restricted in Nevada. You can still sell your positions or wait for them to resolve, but you won’t be able to buy new contracts.”
It added, “This situation is unprecedented — Nevada is currently the only state with temporary restrictions in effect due to a court order. We disagree with those restrictions, but as a law-abiding company, we’re following them. We’re confident in our legal position, and we’ll continue to fight for your right to trade the same products that are available in 49 other states.”
Other states have also issued negative rulings against Kalshi, but have generally agreed to allow the company to continue operating until the rulings are finalized. In Massachusetts, a judge granted the state an injunction, but Kalshi was granted a motion to stay in the appeals court.
Latest Lawsuit Names Kalshi Founders
While it does battle with state regulators across the country, Kalshi is also facing a flood of lawsuits brought by individuals and legal firms.
The latest filing specifically names Kalshi co-founders Tarek Mansour and Luana Lopes Lara. The company’s Chief Compliance Officer, Joshua Beardsley, has also been named in the suit, which has been filed in California.
As highlighted by gaming lawyer Daniel Wallach, the lawsuit notes that the defendants initially “admitted that Sporting Event Contracts have ‘no inherent economic significance.’”
In a hearing when Kalshi was fighting for the legal right to offer markets on elections, a company lawyer stated, “[Y]ou can see it in the congressional record, and they give three examples of gaming contracts: Football, horse racing, golf. They’re all games. It’s something that has no inherent economic significance. It’s something done for amusement. It may be done purely to facilitate the betting itself for its own sake.”
The lawsuit claims that despite “repeatedly recognizing this legal line in the sand, the Kalshi Defendants got greedy and crossed it in bad faith.”
Legal firms from four different states filed the lawsuit on Friday. Rather than claiming the company is violating state gambling laws, as most litigation has focused on, the lawsuit says Kalshi is violating the Commodity Exchange Act (CEA), which acts as the rulebook for prediction market platforms.
The CEA prohibits markets on gaming, but the Commodity Futures Trading Commission (CFTC) has not opposed platforms from offering sports markets. It has issued an advisory on sports markets, but has not gone so far as to say that these markets constitute gaming.
Despite mounting legal challenges, Kalshi had its second-largest day of trading volume thanks to March Madness and surpassed $3 billion in weekly trading volume. The company has been valued at $22 billion in a recent funding round.
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Kalshi has been forced to exit a state in the US for the first time, temporarily blocking access to its sports markets in Nevada after a judge issued a temporary restraining order (TRO) against the company. Legal battles are intensifying over the platform’s controversial sports prediction markets, and a new lawsuit has named Kalshi’s co-founders
The post Kalshi Exits Nevada While New Lawsuit Goes After Company Founders appeared first on CasinoBeats.