A Nevada state judge has reinforced a ban on Kalshi, indicating he will approve the Nevada Gaming Control Board's (NGCB) request for a preliminary injunction. This decision represents the most significant court-backed limitation on prediction markets in the United States.
Currently, Nevada is the only state enforcing a court-mandated prohibition against a prediction market operator. Judge Jason Woodbury of the First Judicial District Court in Carson City determined that Kalshi's event contracts qualify as gambling under Nevada law. He has given the company until May 4 to implement geofencing technology to restrict access for Nevada residents.
The ruling, made on April 3, extends a previous temporary restraining order (TRO) that was put in place on March 20, which prohibited Kalshi from providing sports, election, and entertainment-related contracts in Nevada.
According to the Las Vegas Review-Journal, Woodbury indicated that he plans to issue a preliminary injunction along with another 14-day TRO while he finalizes the wording. This preliminary injunction would effectively bar Kalshi from offering its contracts until the legal proceedings advance.
The crux of the case revolves around Kalshi's assertion that its contracts fall under the exclusive federal jurisdiction as financial instruments overseen by the Commodity Futures Trading Commission (CFTC). However, Woodbury dismissed this claim, siding with the NGCB's argument that these contracts operate as traditional betting.
Woodbury emphasized the similarities between Kalshi's contracts and conventional wagering, stating, "I could take a $100 right now and walk a couple blocks and put a $100 on the Dodgers to win tomorrow. I could also do that by depositing that money in a licensed operator’s online gaming application and do the same thing. No matter how you slice it, that conduct is indistinguishable. Thus, I find that this activity is prohibited for any non-licensee to engage in."
Kalshi has been ordered to implement geofencing measures by May 4. Woodbury noted that while the company could request an extension, it must provide a detailed explanation of the steps taken towards compliance, including the progress made and the remaining tasks.
This requirement challenges one of Kalshi's main defenses in various cases, which argued that geofencing would be prohibitively expensive. Simultaneously, it aligns the platform with compliance standards already in place for licensed sportsbooks in Nevada.