Kalshi isn’t going down in Nevada and New Jersey without a fight.
The prediction market platform that offers sports-event contracts recently filed a lawsuit, seeking injunctive relief from cease-and-desist orders issued by both states’ regulator bodies.
“Nevada’s attempt to regulate Kalshi intrudes upon the federal regulatory framework that Congress established for regulating futures derivatives on designated exchanges,” Kalshi said in the lawsuit against Nevada, according to a Bloomberg report.
The lawsuit against Nevada looks to block what it calls a violation of the Commodity Exchange Act (CEA). The prediction market company is federally regulated by the Commodity Futures Trading Commission (CFTC), not at the state level.
“The Commodity Exchange Act explicitly and unambiguously delegates the ‘exclusive’ power to oversee, approve, and regulate futures trading on registered exchanges to a federal agency – the CFTC,” Kalshi said in the lawsuit.
This follows the Nevada Gaming Control Board and the New Jersey Division of Gaming Enforcement trying to stop Kalshi and partner Robinhood from offering its sports prediction markets in their states. Legal sports betting is currently operating in 38 states, but Kalshi’s markets are available in all 50 states.
“I can’t speak to why they are taking this action, but prediction markets have proven their use, so it is a shame that these authorities are still trying to censor them,” Kalshi founder Tarek Mansour said in a social media post on X. “We are left with no choice: sue.”
Kalshi just filed suit in federal court against the states of Nevada and New Jersey. As promised, Kalshi will keep fighting for the right of prediction markets to thrive.
— Tarek Mansour (@mansourtarek_) March 30, 2025
Over the last decade, the concept of objective truth has been dangerously eroded by aggressive… pic.twitter.com/sgJtJXz6Pj
‘Deaf ears’
The company claims that it sports-outcome markets aren’t gambling products, and compliance to the state orders could lead to issues with current open markets and the CFTC as well as financial and reputational damage.
Mansour said Kalshi tried to educate Nevada sports betting and New Jersey sports betting regulators about prediction markets and show “how critical they are … but our words fell on deaf ears.”
That led to Kalshi taking legal action, but where this unprecedented case goes from here is unknown.
Gaming lawyer Daniel Wallach said in an X post that a shift in Kalshi’s arguments could lead to judicial estoppel, a legal doctrine that might prevent the company from taking a position that contradicts a previous position in a prior proceeding. It’s used to protect judicial integrity.
“Kalshi has done a complete 180,” Wallach said. “While now claiming that ‘sports-event contracts’ are lawful under federal law, it previously asserted in its federal court lawsuit against the CFTC that such contracts were antithetical to federal law.”
Kalshi has done a complete 180. While now claiming that ‘sports-event contracts’ are lawful under federal law, it previously asserted in its federal court lawsuit against the CFTC that such contracts were antithetical to federal law.
— Daniel Wallach (@WALLACHLEGAL) March 31, 2025
The receipts are below.
Judicial estoppel?✅ pic.twitter.com/jhVjJmm09U
‘Significant legal issue’
The chief analyst for regulatory technology provider Vixio called Kalshi’s prediction market legality pursuit “perhaps the most significant legal issue of sports betting in nearly a decade.”
“Vixio has been tracking the regulation of the U.S. sports betting market since the landmark Supreme Court ruling of 2018 that called time on the federal prohibition, and Kalshi’s litigation marks a key turning point for the future of the market,” Vixio’s James Kilsby said in a statement.
“At stake is whether regulation of sports wagering will continue to be a matter for state and tribal governments to determine, or whether there will be a new paradigm of federal regulation that enables licensed exchanges to operate across all 50 states under a framework that does not mesh with state laws on traditional forms of gaming.”
The American Gaming Association called sports-event contracts “problematic for a variety of public reasons.” The Indian Gaming Association argues that the contracts violate the CEA as well as federal and state laws, while also going against tribal gaming compacts.
Market madness
The CFTC originally didn’t want Kalshi to launch predictive markets in the U.S., but a court order last fall opened the door for election betting that generated hundreds of millions of dollars in trades on the site. Kalshi teamed up with trading platform Robinhood earlier this year to start offering sports contracts, which act like wagers.
Super Bowl markets appeared on both platforms before March Madness took precedent this month, creating more than $200 million in handle last weekend alone. New Jersey sports betting prohibits college basketball events held in the state.
Newark was one of the Sweet 16/Elite Eight sites this weekend. The NJDGE argues Kalshi violated its gambling laws. Robinhood responded by eliminating single-game NCAA tournament markets in the Garden State.
