The Nevada Gaming Control Board (NGCB) has ordered financial trading platform Kalshi to cease all unlawful activity in Nevada by next Friday.
The gambling regulator issued the trading platform with a cease and desist order earlier this week, notifying the company that offering “event-based contracts” on sporting events and election outcomes “is unlawful in Nevada, unless and until approved as licensed gaming by the Nevada Gaming Commission.”
The NGCB letter details multiple Nevada Revised Statutes and Nevada Gaming Commission Regulations that Kalshi is violating, and warned the company that such conduct may result in criminal charges.
According to the NGCB, licensed sports pools in Nevada are prohibited from accepting wagers on event-based contracts on the outcome of elections, advising Kalshi that its actions are in direct violation of Nevada’s public policy.
Kalshi has been instructed to cease all unlawful activity within Nevada by 5pm on Friday 14 March.
Additionally, the regulator pointed out that past unlawful action remains subject to criminal and civil penalties, and any future unlawful activity will be deemed willful violations.
“Every sports pool in Nevada must undergo an extensive investigation prior to licensing, must adhere to strict regulation once licensed, and must pay all applicable taxes and fees,” said NGCB chairman Kirk Hendrick. “Any unlawful attempts to circumvent Nevada’s right to regulate gaming activity within its borders will be met with the full force of criminal and civil penalties.”
Betting on the outcome of last year’s US presidential elections was allowed following a ruling last October by the US Court of Appeals for the District of Columbia, involving Kalshi and the Commodity Futures Trading Commission (CFTC).
In a post on LinkedIn, Kalshi CEO Tarek Mansour said that when he founded the company alongside Luana Lopes Lara, they had set out to build prediction markets into the world’s largest financial market.
“From day one, we defined a core principle: Do things the right way,” he said. “We knew that regulation and trust had to be the foundation to build something enduring. That’s why we spent three grueling years getting regulated by the CFTC before we launched a single product.
“We prevailed, got regulated, and made prediction markets legal in the US. But the fight wasn’t done. Our next step was the election market. After years of engaging with the CFTC, they rejected it. Again, we stayed true to our principle: instead of going around regulations or going offshore, we decided to ask Federal Courts to weigh in. The Courts sided with us because we were right on the law. We freed prediction markets, took them mainstream, and won big.
“After the election, we were convinced that the value of prediction markets was now obvious to everyone, and that the regulatory battle for legal prediction markets was over… We were right, except for the everyone part.”
Mansour said that while the company was disappointed to see the letter from the NGCB, Kalshi will stay committed to its approach and “keep paving the way for regulated prediction markets to thrive in the US.”
“We have fought hard to get to this point, but the job’s not finished and the work will continue till prediction markets achieve their full potential,” he added.