A Nevada judge temporarily blocked Kalshi from doing business in the state, ruling that state authorities were likely to prevail in a legal dispute over whether the company’s event contracts violated Nevada gaming laws.
Carson City District Court Judge Jason Woodbury issued a fleeting restraining order on Friday, joining the Nevada Gaming Control Commission’s request to block Kalshi from operating in the state for 14 days.
“Prediction markets, to the extent they facilitate unlicensed gambling, are illegal in Nevada, and we have a statutory duty to protect the public” – Mike Dreitzer, chairman of the Nevada Gaming Control Board he said in a statement to Reuters.
Kalshi did not immediately respond to a request for comment.
The court’s decision came after a federal appeals court on Thursday rejected Kalshi’s emergency request to stay the federal court proceedings, allowing Nevada regulators to take action.
Nevada blocks contracts for sports, election and entertainment events
In his order, Judge Woodbury wrote that Kalshi was prohibited from offering contracts for sporting, electoral and entertainment events in Nevada.
He added that, according to records from the early stages of the case, such arrangements are considered under Nevada law to be a “sports pool” that Kalshi was not licensed to operate.
Last month, the Nevada Gaming Control Board sued Kalshi, saying the company must obtain a state license to offer contracts for sporting events.
Kalshi argued that his contracts fell under the exclusive jurisdiction of the Commodity Futures Trading Commission, an agency that supports prediction markets that are facing charges in multiple state courts over allegations of offering illegal gambling.
“The issue of federal preemption in this regard is nuanced and rapidly evolving,” Judge Woodbury wrote in his motion, rejecting Kalshi’s argument. “At this time, the balance of compelling legal authority balances federal preemption in this context.”
Related: Kalshi CEO slams Arizona criminal charges as ‘total overreach’
Judge Woodbury scheduled a hearing for April 3 to consider the motion for a preliminary injunction against Kalshi.
Kalshi is being sued or has initiated its own legal action against multiple states that have accused the prediction market of operating without a state license.
Earlier this year, a Massachusetts judge banned Kalshi from offering contracts for sporting events, which was overturned after Kalshi appealed the decision.
Arizona filed criminal charges against Kalshi on Tuesday, with state Attorney General Kris Mayes accusing Kalshi of “conducting an illegal gambling operation,” which Kalshi CEO Tarek Mansour called a “total overreach.”
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