(This April 3 story has been repeated without any changes to the text)
By Nate Raymond
April 3 (Reuters) – A Nevada judge on Friday extended a ban on prediction market operator Kalshi from offering event-based contracts that would allow the state’s residents to place bets on sports and other matters without the company obtaining a gaming license.
Judge Jason Woodbury at the end of a court hearing in Carson City said he would issue a preliminary injunction sought by the Nevada Gaming Control Board that will bar Kalshi from offering such contracts in the state without a gambling license.
A lawyer for New York-based Kalshi argued that such contracts constitute “swaps” that fall under the U.S. Commodity Futures Trading Commission’s exclusive jurisdiction, a position the agency has likewise adopted in related litigation.
But Woodbury was unconvinced, saying just as he could place a $100 bet through a state-licensed gaming operator on a baseball game, he could also effectively do the same thing by buying a sporting event contract on Kalshi’s platform.
“No matter how you slice it, that conduct is indistinguishable,” he said. “So I find based on the arguments that have been presented that it is a gaming activity that is prohibited for any non-licensee to engage in.”
He extended an earlier 14-day temporary restraining order he issued on March 20 barring the offering of sports, elections and entertainment-related event contracts through April 17 to provide time to finalize the terms of an injunction that would remain in place longer term.
Kalshi did not immediately respond to a request for comment.
Nevada is the only state to have secured a court-enforced, in-effect ban against New York-based Kalshi, which has become a central focus in an escalating legal battle over the power of states to police prediction markets.
Companies like Kalshi allow users of their prediction markets to place financial bets on the outcome of a wide range of events such as sports and elections by trading “events contracts.”
The CFTC sued three states on Thursday to challenge their ability to regulate companies like Kalshi. Those states include Arizona, which last month became the first state to pursue criminal charges against Kalshi for operating an illegal gambling business in the state.
An injunction issued by a Massachusetts judge blocking Kalshi from offering sports event contracts in that state is on hold while the company appeals.
(Reporting by Nate Raymond in Boston; Editing by Mark Porter)
