(Bloomberg) — Kalshi sued Nevada’s gaming regulators to keep offering so-called event contracts to bet on sports and politics, setting up a clash between state and federal regulators.
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According to Kalshi, as a federally regulated derivatives exchanges the US Commodity Futures Trading Commission has the ultimate power to decide what types of wagers it can and can’t offer to customers. However, Nevada’s regulators say Kalshi’s contracts violate state rules for sports pools, which are required to be licensed, inspected and taxed.
Kalshi is overseen by the CFTC. Historically, in the US, states have regulated the gaming industry.
Earlier this month, the head of the Nevada Gaming Control Board threatened penalties if Kalshi offered contracts that sought to “circumvent Nevada’s right to regulate gaming activity within its borders.”
In its lawsuit on Friday, Kalshi said it had failed to reach an agreement with Nevada authorities on the legality of its event contracts. Kalshi asked the court to recognize that Nevada can’t enforce its gambling laws against the firm because its federally regulated by the CFTC.
“Nevada’s attempt to regulate Kalshi intrudes upon the federal regulatory framework that Congress established for regulating futures derivatives on designated exchanges,” Kalshi’s lawyers say in the suit.
Neither the Nevada Gaming Control Board nor the Nevada Gaming Commission immediately responded to requests for comment sent outside of normal business hours late Friday.
Kalshi’s derivative contracts let people wager on all sorts of events, from Oscar winners to the interest rate decisions by the Federal Reserve Board. Kalshi began offering bets on sports markets in January.
The case is KalshiEX, LLC v. Hendrick et al, 25-cv-00575, US District Court, Nevada (Las Vegas).
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