Nevada became the first state to take legal action against event-based sports futures contracts, sending the financial technology company Kalshi a cease-and-desist letter on Tuesday.
The result of Nevada’s shutdown attempt could have far-reaching effects, as it will be up to local authorities to lead the battle against sports futures trading if a push for federal intervention fails.
The Nevada Gaming Control Board told Kalshi to stop offering event-based contracts on sports and election outcomes in the state by end of business on March 14. If Kalshi does not follow the order, Nevada Gaming Control Board chair Kirk Hendrick warned that his office would pursue “criminal and civil penalties.”
Kalshi did not promise to comply with the cease-and-desist letter in its initial response. “We have and will always be committed to our regulation-first approach,” wrote a Kalshi spokesperson. “We just received the NVGCB letter, and the team is reviewing it.”
Kalshi CEO Tarek Mansour also published a statement to X in which he lamented being “bogged down in infinite bureaucracy” throughout his time leading the company. Mansour, who called Nevada’s letter disappointing, did not explicitly say whether Kalshi would comply with the state’s demand.
“We have fought hard to get to this point, but the job’s not finished and the work will continue [until] prediction markets achieve their full potential,” Mansour wrote.
Currently, the federal Commodity Futures Trading Commission (CFTC) oversees futures contracts rather than states, which are responsible for regulating gambling. Critics argue sports event futures are synonymous with sports betting and should be governed as such.
The CFTC is reassessing sports event contract policies ahead of a roundtable discussion with industry stakeholders, and during a public comment phase, it received criticisms of sports futures from lobbyists and tribal groups. A date for the roundtable has not been publicly announced.
As Sportico has previously reported, industry insiders sense the CFTC is predisposed to act in favor of Kalshi—which has ties to the Trump family—and similar platforms such Crypto.com. State-level actions such as Nevada’s offer a next line of defense.
Kalshi’s strategy toward Nevada’s cease-and-desist order could signal how it will approach potential edicts from other states.
Refusal to comply with the Nevada Gaming Control Board’s memo would carry the risk of monetary fines. Violating a cease-and-desist order can lead to criminal charges, but that seldom happens.
If Kalshi doesn’t heed Nevada’s warning, the state can seek a preliminary injunction in court to block sports event futures trades.
Kalshi could counter by seeking a court order to block the Nevada Gaming Control Board from enforcing its takedown demands.
Complicating matters, Hendrick, the Nevada Gaming Control Board chair, announced in January he would step down from his post later this year before his term ends. Brittnie Watkins completed her term on the three-person board in January and was replaced by Chandeni Sendall.
Kalshi has a track record of taking the litigation route against agencies, previously suing the CFTC, then under the Joe Biden administration, over election contract restrictions. The company won that case in U.S. District Court, and the D.C. Circuit Court of Appeals heard oral arguments in January just before Donald Trump began his second term in the White House. A decision there has not been announced.