The blows keep landing for predictions market platform Kalshi, which faces mounting pressure from U.S. state regulators with cease-and-desist orders issued in Nevada, New Jersey and now Ohio.
Kalshi, which has been offering sports markets, quickly fired back, announcing it has filed a federal lawsuit against Nevada and New Jersey’s gaming regulators, defending its right to operate and regulatory legitimacy provided by the Commodities Futures Trading Commission (CFTC).
State Regulators Crackdown
Nevada, New Jersey, and Ohio’s gambling regulators have issued cease-and-desist orders to Kalshi. The crackdown began on March 4, with the Nevada Gaming Control Board issuing the first cease-and-desist order, stating it considered the platform “unlawful in Nevada unless and until approved by the Nevada Gaming Commission.”
Following suit on March 27, the New Jersey Division of Gaming Enforcement gave Kalshi marching orders, saying the platform “listed unauthorised sports wagers” and that its offerings also go against the state’s constitution, which outlaws betting on college games, regardless of location.
Lastly, Ohio’s Casino Control Commission (OCCC) joined the call yesterday, issuing a cease-and-desist order to Kalshi, Robinhood and Crypto.com, citing a lack of consumer protections over products, which met the definition of “sports gaming” as mandated by state laws.
OCCC Chief Executive, Matthew Schuler, commented: “Purchasing a contract based on which team a person thinks will win a sporting event is no different than placing a bet through a traditional sportsbook.”
The mounting number of cease-and-desist orders spells trouble for the company and threatens its ability to operate freely across key U.S. markets. There’s a lot at stake, as Kalshi reported last week that more than US$373 million (£288.3m) had already been traded on March Madness tournament contracts.
Kalshi Fights Back
Kalshi isn’t going down without a fight. Yesterday, the company’s CEO, Tarek Mansour, took to LinkedIn to announce they had filed a federal lawsuit against Nevada and New Jersey’s regulators.
In his post, Mansour stressed the importance of prediction markets in a time of “aggressive politicisation, rampant misinformation, and biased journalism”. He called them the “quintessential truth machines”, necessary when confidence in traditional institutions was “at an all-time low”.
Mansour explained Kalshi was legally challenging the cease-and-desist orders, because the state regulators “fundamentally misunderstand prediction markets” and in sending the orders were undermining “the foundation of U.S. financial markets, which are regulated by the federal government”.
Mansour said Kalshi had tried communicating with regulators in Nevada and New Jersey, but their efforts had fallen on “deaf ears”.
