By Nate Raymond
Feb 17 (Reuters) - Nevada gaming regulators filed a lawsuit on Tuesday seeking to block prediction market operator Kalshi from offering events contracts that would allow its residents to bet on sports including football and basketball games.
The Nevada Gaming Control Board filed the lawsuit as part of an escalating battle over the ability of state gaming regulators nationally to police companies like Kalshi that allow users to place financial bets through their prediction markets.
It
sued on the same day that the Commodity Futures Trading Commission in a brief in related litigation threw its support behind companies like Kalshi by arguing it had exclusive jurisdiction over prediction markets.
Kalshi had sought for months to prevent Nevada regulators from filing a case against it. But a federal appeals court on Tuesday declined to put on hold a judge's November order dissolving an injunction that had previously prevented Nevada authorities from pursuing an enforcement action.
Should Nevada prevail, it would become the second state to secure a court order blocking Kalshi from offering sports events contracts, after a Massachusetts judge on February 5 issued an injunction at the behest of the state's attorney general.
That injunction was set to take effect in 30 days, but a state appeals court justice on Tuesday put it on hold while Kalshi appeals.
Nevada in Tuesday's lawsuit contends that offering sports event contracts, or certain other event contracts, constitutes wagering activity under Nevada state law and that, as a result, Kalshi must be licensed.
It said Kalshi had not complied with state gaming regulations, including those prohibiting anyone under 21 from placing wagers and requiring entities accepting wagers on sports events to deploy safeguards against wagers by insiders like players and match fixing.
The state has already convinced judges to issue orders barring two other prediction market operators, Coinbase and Polymarket, from offering events contracts.
Nevada is seeking to have a state court judge issue a similar temporary restraining order against Kalshi, but the company soon after Tuesday's case was filed sought to have it transferred to federal court, saying the case raised a matter of law over whether it was subject to the CFTC's exclusive jurisdiction.
The New York-based company contends the federal regulator has sole jurisdiction over its events contracts as they are a form of swaps, a type of derivative contract.
(Reporting by Nate Raymond in Boston; Editing by Stephen Coates)
