The federally regulated derivatives exchange Kalshi, has filed a lawsuit against Nevada gaming regulators in a bid to continue offering sports and political event contracts, setting the stage for a showdown between state and federal oversight of betting activities.
This comes shortly after the U.S. Commodity Futures Trading Commission (CFTC) took an interest in Crypto.com for offering Kalshi’s event-based contracts that allowed betting on the outcome of the Super Bowl. Due to this, Robinhood had withdrawn from similar offering just a day after listing.
The lawsuit, filed Friday in the U.S. District Court in Las Vegas, comes after Nevada authorities threatened penalties against Kalshi for offering contracts that they claim violate state rules for sports pools. Kalshi argues that as a federally regulated entity under the CFTC it should be exempt from state gambling laws.
“Nevada’s attempt to regulate Kalshi intrudes upon the federal regulatory framework that Congress established for regulating futures derivatives on designated exchanges,” Kalshi’s legal team stated in the court filing cited by Bloomberg.
The dispute highlights the growing tension between traditional state-regulated gambling and the emerging market for event-based derivatives. Kalshi, which allows users to wager on outcomes ranging from Oscar winners to Federal Reserve interest rate decisions, began offering sports-related contracts in January.
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.
Over the last decade, the concept of objective truth has been dangerously eroded by aggressive… pic.twitter.com/sgJtJXz6Pj
— Tarek Mansour (@mansourtarek_) March 30, 2025
Order to Shut Down Sports Contracts
Earlier this month, the Nevada Gaming Control Board warned Kalshi that its contracts were attempting to “circumvent Nevada’s right to regulate gaming activity within its borders.” The state maintains that such activities fall under its purview and require proper licensing, inspection, and taxation.
Nevada gaming authorities have yet to respond to the lawsuit. Industry experts suggest this case could have far-reaching implications for the future of sports betting and event-based financial products in the United States.
Especially since, although Kalshi is CFTC-regulated, the same Commission had already been examining the offering of the company’s event-based contracts through retail trading service providers.
Crypto.com, Robinhood, and Super Bowl Event Contracts
At the beginning of February, the CFTC launched an investigation into Super Bowl-related event contracts offered by Crypto.com and Kalshi, questioning their compliance with derivatives regulations.
“We are continuing to review the contracts in accordance with our regulations,” a CFTC spokesman stated.
As a result, playing it safe, Robinhood decided to withdraw from offering the same type of instruments just a day after introducing them to its users.
While this sparked a debate about whether the future of event-based contracts is at risk, a little over a month later, Robinhood went fully fledged into offering prediction trading alongside Kalshi.
