Who has the right to regulate events prediction markets, the states, or the federal government? That’s the question at the heart of a dispute between events prediction giant Kalshi and the Nevada Gaming Control Board (NGCB). The battle took an interesting turn earlier this week when the NGCB threw Kalshi’s own arguments right back in their faces.
In a separate court proceeding, Kalshi argued that the Commodities Exchange Act of 1936, which currently regulates event prediction markets, does not include gaming. Further, Kalshi’s lawyers made a case for why election contracts aren’t gaming saying, “An event contract thus involves ‘gaming’ if it is contingent on a game or a game-related event,” the company said. “The classic example is a contract on the outcome of a sporting event; as the legislative history directly confirms, Congress did not want sports betting to be conducted on derivatives markets. Elections, by contrast, are not games or related to games. They are not staged for entertainment, diversion or sport.”
In a brief filed this week with the Circuit Court, the NGCB threw Kalshi’s argument back in their faces saying, “By enacting the CEA, Congress did not manifest a clear intent to exclusively occupy the entire field of gaming laws. Nor did the NGCB’s enforcement of its gaming laws create an impenetrable obstacle to securing the full purposes and objectives of Congress in enacting the CEA,” according to a report on SBC Americas.
Kalshi’s vs. the NGCB is just one of several cases the company is fighting in its efforts to retain sports-related contracts. Licensed sports betting operators, and the agencies that regulate them, say that Kalshi is merely engaging in unlicensed sports betting. Kalshi is arguing that sports are part of their mandate and that they are not. Both parties are due back in court for oral arguments this week.