Nevada's Regulator Calls Kalshi's Contracts Bets and Kalshi Vows to Fight On

The Nevada Gaming Control Board used its first meeting after the Ninth Circuit ruling to say sports event contracts are sports bets, full stop. Kalshi's co-founder says the company will keep arguing for a single federal regulator, and New Jersey has now asked the Supreme Court to settle it.

• Nevada Gaming Control Board chairman Mike Dreitzer told Wednesday's meeting in Carson City that sports prediction contracts are "indistinguishable from sports bets" and illegal in the state without a licence
• The board spent about ten minutes praising the Ninth Circuit's 28 August decision in Nevada's favour before turning to its agenda
• Kalshi co-founder and chief operating officer Luana Lopes Lara told the Las Vegas Review-Journal the company's model is financial-market trading and belongs under one federal overseer, not fifty state regimes
• Dreitzer said he was "deeply concerned" about 18 to 20-year-olds gambling on sports through platforms that present it as investing, citing a CNN report of $4 billion in such trades this year
• On the same day New Jersey filed the first certiorari petition asking the Supreme Court to resolve the split between appeals courts

Nevada's Board Chose to Make a Statement Rather Than Wait for the Courts

The Nevada Gaming Control Board opened its meeting on Wednesday with a statement rather than an agenda item, according to the Las Vegas Review-Journal's report of the session. Chairman Mike Dreitzer said that whatever terminology prediction markets use to describe their business, it is a form of gambling, and that engaging in it in Nevada without a licence is illegal.

"These sports prediction contracts are indistinguishable from sports bets," Dreitzer said, quoting the Ninth Circuit's own line that placing sports bets "even when called by another name is still gambling". Any time money is risked on the uncertain outcome of a sporting event, he added, "that's a bet. End of story."

Dreitzer and fellow board members George Assad and Chandeni Sendall spent about ten minutes on the appeals court's 28 August ruling, which found that Kalshi's sports contracts are not swaps under the Commodity Exchange Act and left Nevada's enforcement position intact. Dreitzer called it "an important victory" and said the court had provided "a full and thoughtful decision on the matter".

The chairman also raised the age question. Prediction markets are open at 18 under federal derivatives rules, while Nevada's sports betting age is 21. "I am deeply concerned about 18-, 19- and 20-year-olds who gamble on sports. Losses at that age may come out of tuition, rent, books or other necessities," he said, adding that presenting betting as investing blurs a distinction young people need to keep. He cited a CNN report that 18 to 20-year-olds had made $4 billion of prediction-market sports trades since the start of the year, before the football season. iGaming Times reported last week that under-21s had traded $5.4 billion on Kalshi on the same age logic.

Kalshi Says the Model Only Works Under One Federal Regulator

Kalshi's response came through its co-founder and chief operating officer, Luana Lopes Lara, in an interview with the Review-Journal published alongside the board's remarks. Lopes Lara, who founded the company with chief executive Tarek Mansour after the two met as students at the Massachusetts Institute of Technology, said the business is financial-market trading, not gambling, and that a patchwork of state and tribal rules "just doesn't work with our model". Financial exchanges, she said, "have always been regulated federally".

She also disputed the two criticisms regulators make most often. On minors, she said cash trading is impossible for under-18s, that sign-up requires identity documents and a Social Security number, and that the company runs surveillance and machine-learning checks and blocks attempted underage sign-ups every month. On tax, she said states "are able to tax us", noting that some are already proposing levies on prediction markets; Illinois enacted one this year and is now being sued over it.

The Nevada remarks landed on the same day that New Jersey Attorney General Jennifer Davenport filed a petition for a writ of certiorari at the Supreme Court, the first to ask the justices whether states and tribes can keep self-certified sports contracts out of their jurisdictions. Her office said litigation had "erupted across at least 20 states, with dozens of active suits pending and the gambling laws of several states currently enjoined by the federal courts". Analysts quoted by the Review-Journal do not expect the court to act before late this year or next.

The Ninth Circuit Gave Nevada Its Argument Back, and the Board Is Using It

For most of the past year the running had been made by Kalshi's lawyers and the Commodity Futures Trading Commission, which sued states and told them federal law pre-empted their gambling codes. The Ninth Circuit's holding that the contracts are not swaps at all changes the terms of the debate in the western states, and Dreitzer's statement is the sound of a regulator that no longer has to argue from first principles. Quoting the court rather than the statute is a deliberate choice: it tells licensees, and the platforms, that Nevada's position now carries a federal appellate judgment behind it. The risk for the board is that a different circuit rules the other way, which is exactly why New Jersey wants the Supreme Court to move.

The Age Gap Is the Argument Regulators Can Win in Public

Whether a sports contract is a swap is a question for lawyers. Whether an 18-year-old should be able to bet his rent on a game through an app that calls itself an exchange is a question anyone can answer, and Dreitzer's decision to lead with it is a sign of where the states think the public argument lies. Kalshi's answer, that its checks are stronger than many states', is a claim about minors rather than about 18 to 20-year-olds, who are legal customers under its rules. Until the platforms either raise the age or accept state limits, that gap will keep supplying regulators with their most quotable material.

A Federal Answer Would Suit Both Sides More Than the Status Quo

Lopes Lara's case for a single federal overseer is not far from what state regulators are asking for, which is a single answer. A decade of state-by-state litigation is expensive for Kalshi and unpredictable for licensees who must decide whether to partner with the exchanges or shun them. The petition from New Jersey is the first attempt to shorten that decade. Nevada's board has made clear which answer it expects.

Nevada has the strongest court record of any state in this fight, and it is now speaking like a regulator that intends to use it. The Supreme Court, if it takes the case, will decide whether that record travels.