TechFlow news, March 30 — According to The Block, prediction market platform Kalshi has filed a lawsuit against the states of Nevada and New Jersey after receiving cease-and-desist orders from their gaming regulatory authorities. The regulators demanded that Kalshi stop offering sports-related contracts, asserting such activities constitute sports betting, which only state-licensed entities may operate.
In its lawsuit, Kalshi argues that as an exchange regulated by the U.S. Commodity Futures Trading Commission (CFTC), it falls under exclusive federal oversight, and that the Commodity Exchange Act preempts state laws. The Nevada Gaming Control Board contends that Kalshi’s contracts constitute gambling because payouts depend entirely on the outcome of external events, rather than actions taken by the contract participants.
Kalshi CEO Tarek Mansour stated that prediction markets represent a crucial innovation of the 21st century, and the company will defend this technology in court. The core of the dispute centers on whether event- or sports-based contract trading constitutes state-regulated gambling or federally regulated financial derivatives trading under exclusive authority of federal regulators.
