Event-based betting company told to stop offering contracts in Nevada

A New York-based company has until Friday afternoon to stop offering its “event-based contracts” in Nevada before state authorities turn to prosecuting it and its top executives.

The Nevada Gaming Control Board on March 4 issued a cease-and-desist letter to KalshiEX LLC, doing business as Kalshi and Kalshi.com, which offers a platform where users can trade on the outcome of future events, including economic indicators, weather patterns, awards and political outcomes.

The demand letter, signed by Control Board Chairman Kirk Hendrick, instructs the company to cease all unlawful activity within Nevada by 5 p.m. on March 14. Additionally, the letter explains that past unlawful action remains subject to criminal and civil penalties, and any future unlawful activity would be deemed willful violations.

Kalshi did not return messages seeking comment Thursday.

“Every sports pool in Nevada must undergo an extensive investigation prior to licensing, must adhere to strict regulation once licensed and must pay all applicable taxes and fees,” Hendrick said in the letter that also was copied to Gov. Joe Lombardo, Secretary of State Francisco Aguilar, several members of the Attorney General’s Office and fellow Control Board members George Assad and Chandeni Sendall.

“Any unlawful attempts to circumvent Nevada’s right to regulate gaming activity within its borders will be met with the full force of criminal and civil penalties,” Hendrick said.

Kalshi, which says it is the first exchange regulated by the federal Commodity Futures Trading Commission, is dedicated to trading on the outcome of future events, usually with yes-or-no propositions.

Its website addresses a number of topics, from inflation and interest rates to unemployment and whether the government will shut down.

Among the propositions posted on the Kalshi website Thursday were “Will Trump eliminate the Department of Education this year?” and “The number of tornadoes this month will be higher or lower than 150.”

The company says its vision is to allow people to capitalize on their opinions, trade in the domain of every day, and hedge risks that relate to them.

But the Control Board doesn’t see it that way.

In his letter to Kalshi CEO Tarek Mansour and Chief Regulatory Officer and General Counsel Eliezer Mishory, Hendrick said the company is offering a form of wagering without being licensed.

“Presuming that Kalshi consulted with Nevada legal counsel, your company was undoubtedly advised that Nevada has a long and storied history of strictly regulating gaming activity,” Hendrick said. “Encompassed within such strict regulation is the requirement that a person must be licensed to operate a sports pool in Nevada. A sports pool is a person in ‘the business of accepting wagers on sporting events or other events by any system or method of wagering.’ A ‘sporting event’ is ‘an individual race, game, match or contest’ or any part of a series of those events.”

Hendrick also noted that betting on election outcomes is a violation of the state’s public policy.

“Kalshi is in the business of offering event-based contracts which constitute a system or method of wagering on sporting events and other events,” he said. “Therefore, by offering event-based contracts in Nevada, Kalshi is operating as an unlicensed sports pool.”

Hendrick cited potential violations of Nevada Revised Statutes as well as Regulations 22 and 26B in the letter.

Contact Richard N. Velotta at rvelotta@reviewjournal.com or 702-477-3893. Follow @RickVelotta on X.