Regulators in Nevada have initiated a motion requesting critical documents from Kalshi, a notable operator in the prediction market sector. This follows a recent court filing aimed at obtaining detailed communications between Kalshi and the Commodity Futures Trading Commission (CFTC). The request is part of an extensive review by the state to better understand the regulatory framework governing prediction markets, particularly as they relate to existing gaming laws.
Nevada’s scrutiny of prediction-based trading platforms, which includes companies like Kalshi and Crypto.com, underscores the state’s efforts to delineate how these markets function within both state and federal regulatory environments. Earlier this year, Judge Andrew Gordon rejected an injunction from Crypto.com, allowing it to continue its offerings in sports prediction products. He cited distinct differences between Crypto.com’s contracts and those managed by Kalshi, setting a precedent for the current regulatory inquiry.
Kalshi has been under additional legal scrutiny since receiving a cease-and-desist order in March. Legal expert Daniel Wallach noted that the company has not yet supplied the necessary correspondence with the CFTC, which could provide clarity regarding its compliance with applicable laws.
The Nevada motion, filed as part of this ongoing investigation, focuses on four critical areas: Kalshi’s adherence to state regulations, the specifics of its event contracts, the alignment of its operations with the CFTC’s “Core Principles,” and its overall compliance status. According to the filing, previous responses from Kalshi have not sufficiently addressed these topics, leading regulators to seek more comprehensive disclosures.
If the motion is granted, it could shed light on how Kalshi’s federally sanctioned operations coexist with Nevada’s intricate gaming regulations, potentially influencing the regulatory landscape for prediction markets moving forward.
