Nevada Appeals Court Issues Blow to Kalshi, Prediction Markets

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The Ninth U.S. Circuit Court of Appeals told Kalshi it has to stay out of Nevada, providing a victory for the state’s gaming regulators.

GGB Magazine

In a unanimous ruling issued by a three-judge panel, the court determined that U.S. District Judge Andrew Gordon did not abuse his discretion when he changed his opinion and allowed the Nevada Gaming Control Board to ban the unlicensed prediction market from offering sports betting contracts in the state.

In its decision, the court rejected Kalshi’s argument that it was impossible to comply with Nevada law and the Commodity Exchange Act (CEA) simultaneously and that Nevada law posed an obstacle to the CEA’s purposes. 

“Because we disagree with Kalshi’s overly broad reading of the CEA, and because (Commodity Futures Trading Commission) CFTC regulations currently prohibit offering contracts related to gaming on prediction markets, we affirm the district court’s order dissolving the injunction as to sports event contracts,” Judge Ryan Nelson wrote.  

Kalshi and other prediction markets have been banned by gaming regulators and courts in several states, saying a 2018 decision by the U.S. Supreme Court gave states the right to regulate sports betting. Industry analysts believe the U.S. Supreme Court will ultimately decide the issues surrounding prediction markets.

The ruling was applauded by gaming industry leaders.

“The Ninth Circuit’s unanimous decision confirmed state and voter choices about sports betting in their communities,” said American Gaming Association CEO Bill Miller in a statement.

“The American Gaming Association applauds Nevada’s leadership for protecting and preserving the state- and tribal-regulated gaming framework. This ruling is a significant win for consumer protections and taxpayers. It is a big loss for Kalshi and other backdoor sports gambling operations who defy state laws.”

Nelson added that “in dissolving the preliminary injunction, (Gordon) did not abuse (his) discretion in analyzing whether Kalshi showed that it was likely to suffer irreparable harm and that an injunction was both equitable and in the public interest.”

The panel affirmed part of the court order that allowed gaming regulators to enforce state laws against Kalshi’s sports-related event contracts. The panel sent the case back to the district court to consider Nevada’s challenges to Kalshi’s election contracts, so they are consistent with the opinion.