Seeking preliminary injunction, the prediction market platform warns that the cease and desist orders in the two states may harm its business
The popular prediction market platform, Kalshi, entered the sports vertical after introducing sports event trading contracts earlier this year. It became the latest prediction market to roll out trading on popular sports events in a move that cast waves across the country.
Kalshi Files Preliminary Injunction Motions in Two States
Kalshi’s actions attracted scrutiny from lawmakers, regulators and even tribal authorities. Although event trading platforms are regulated by the Commodity Futures Trading Commission (CFTC), the popular prediction market platform hit a major roadblock in both Nevada and New Jersey, after receiving cease and desist orders.
Now, Kalshi is seeking to block those orders by filing lawsuits in the two states. The platform is arguing that unless it receives urgent injunctive relief, its operations may sustain irreversible harm.
The cease-and-desist order in Nevada came from the state’s gambling regulator, the Nevada Gaming Control Board (NGCB). While initially, Kalshi was given a deadline to discontinue its operations by March 14, the platform was later got more time to answer. Per the Nevada gambling watchdog, Kalshi’s sports event trading contracts violate the established gambling laws in the state.
On the other hand, in New Jersey, the prediction market platform was also affected by a cease-and-desist order. The move came from the New Jersey Division of Gaming Enforcement and affected Kalshi and Robinhood. Per the regulator’s announcement, the two platforms violated the state’s constitution by offering event trading on college sports. The existing laws in New Jersey prohibit betting on college teams.
The Platform Changed Its Stance on Sports Event Trading
The lawsuits seeking injunctive relief in New Jersey and Nevada filed by Kalshi are quite similar. The legal claim against the NGCB suggests that the gambling regulator doesn’t have the authority to regulate prediction markets, such as Kalshi.
The platform claims that such regulation is solely in the hands of the CFTC, which is the federal body established for that purpose. Similarly, in Nevada, the platform is arguing that the regulator’s attempt to ban federally regulated exchange is unlawful.
However, there’s one fact that contradicts Kalshi’s current stance on sports events trading contracts. This is the platform’s position when it comes to such contracts, which, according to the leading US gaming law and sports betting attorney, Daniel Wallach, shifted in less than a year.
In a post on LinkedIn, the leading attorney reminded that during the fight with the CFTC, Kalshi argued that event contracts tied to the outcome of sporting events were “inconsistent with the Commodity Exchange Act’s text and legislative history.”
Wallach acknowledged Kalshi’s “complete 180 on the legality of event contracts tied to sporting events,” predicting that the platform is likely to face headwinds from the gambling regulators in New Jersey and Nevada in light of its lawsuits seeking a preliminary injunction.
