Nevada sues Kalshi for operating a sports gambling market without a license

Source: Engadget

Nevada’s gambling regulators and attorney general filed a lawsuit against prediction‑market platform Kalshi, accusing the company of bypassing state law by operating a sports‑gambling market without the required licenses and of providing services to individuals under 21, which is prohibited in Nevada. The suit follows a federal appeals court’s rejection of Kalshi’s request to block the state’s legal action and comes a day after the Trump administration asserted that only the federal government has authority over the industry.

Prediction markets and recent growth

Prediction markets let users bet on outcomes such as sports events, political results, and geopolitical developments. Business Insider reported that Kalshi generated 27 times more business during this year’s Super Bowl than during the previous year’s game, while Nevada’s regulated gambling operations saw a decline in activity for the same event.

“Kalshi has continued to dramatically expand its business, rather than attempting to maintain any kind of status quo,” Nevada regulators wrote in a recent letter.

Kalshi and rival Polymarket argue that their products are “event contracts” that should be regulated as financial investments rather than gambling. The Commodity Futures Trading Commission (CFTC) agrees, with Chair Michael Selig filing an amicus brief stating that the CFTC has exclusive jurisdiction over prediction markets.

“The CFTC will no longer sit idly by while overzealous state governments undermine the agency’s exclusive jurisdiction over these markets by seeking to establish statewide prohibitions on these exciting products,” – CFTC Chair Michael Selig, Wall Street Journal op‑ed.

Political connections

• Donald Trump Jr. is a paid adviser to Kalshi and an investor/unpaid adviser to Polymarket.
• In January, the Trump family’s social‑media business announced plans to launch its own prediction‑market platform.

Notable betting activity and concerns

• Polymarket analysis by DeFi Oasis found that fewer than 0.04 % of accounts captured over 70 % of the platform’s total profits, amounting to more than $3.7 billion.
• A Guardian‑reported case involved a user who bet tens of thousands of dollars on “yes” to the question “Israel’s military action against Iran by Friday?” Israel bombed Iran within 24 hours, netting the user $128,000. Blockchain data linked the wallet to an X (Twitter) account located in the Israeli settlement of Beit Ha’shita.
• Another anonymous user earned over $400,000 by betting that Nicolás Maduro would be ousted by the end of January, timing the bets around U.S. strikes on Venezuela.
• Eight jointly owned accounts collectively won $161,000 by betting that María Corina Machado Parisca would receive the Nobel Peace Prize. The accounts used handles such as “fmaduro,” “madurowilllose,” “striketheboats,” and “trumpdeservesit.”