Nevada casinos hope to join the legal battle against sports event contracts, as their trade body aims to get added as a defendant in a federal lawsuit against the state of Nevada by prediction-market operator Kalshi.
In a motion to intervene filed Wednesday, the Nevada Resorts Association (NRA) — a trade body that includes most of the state’s largest casino operators such as Caesars, MGM, and Wynn Resorts — asked to be named as a co-defendant in Kalshi’s lawsuit.
Kalshi sued the state’s attorney general in the U.S. District Court for the District of Nevada in March after the prediction exchange received a cease-and-desist order from the state.
Kalshi offers “contracts” where players can wager money on the outcome of an event — in this context, sports. The business, which offers markets in other areas such as political elections, is certified by the federal Commodity Futures Trading Commission (CFTC) as a futures exchange. However, its ability to offer sports contracts is based on self-certification. Traditional legal sportsbooks are licensed by states and are beholden to a different set of regulations.
Nevada argues that CFTC rules prohibiting gaming and the state’s own laws make Kalshi’s sports event contracts illegal, while Kalshi claims the state’s orders are an attempt to overrule federal law.
The NRA argues that it has standing to intervene in the case, as Kalshi’s offering of sports event contracts threatens the business models of their sportsbooks.
“By framing its ‘sports bet by another name’ products as outside of Nevada’s purview, Kalshi wants an exemption from those rules—i.e., it intends to compete for the same sports betting customers with fewer regulatory requirements and without paying gaming taxes,” the NRA wrote.
“For the NRA members, their Nevada gaming licenses would somehow become simultaneously required, obsolete, mandatory, and irrelevant when it comes to offering sports betting.”
Nevada casinos: Event contracts are wagering
The trade body added that it wished to join the case in order to fully argue the claim that Kalshi’s sports contracts are effectively the same thing as its own members’ sports bets rather than being a financial product.
“There is no question that the event contracts offered by Kalshi are functionally identical to the sports bets offered by the members of the NRA,” the filing said. “Any argument to the contrary is mere sophistry.”
The filing went on to question the idea that sports contracts could be used as “swaps” for hedging purposes, which is generally considered the purpose of traditional futures contracts.
“Kalshi suggests that sports games have significant economic implications for stakeholders — advertisers, sponsors, and local communities,” it said. “The fact that a vendor may sell souvenirs or popcorn, or that a network broadcasts a sports game has no correlation to the outcome of the event. The outcome of sports games or elections do not have financial, economic, or commercial consequences independent of the participants.
“In other words, the game will still take place even absent the ‘stakeholders.’ ”
The NRA hopes that by joining the claim, it can encourage the court to dismiss Kalshi’s claim, allowing the state to enforce its cease-and-desist.
Kalshi is still allowed to operate and offer sports event contracts in Nevada after the court issued an injunction temporarily preventing the state from enforcing the order.
Nevada is not the only state engaged in a legal battle with Kalshi over the legality of sports-related markets. Last month, a judge in the U.S. District Court for the District of New Jersey granted Kalshi’s motion for preliminary injunction against the state’s Division of Gaming Enforcement, while Kalshi also filed for a similar injunction in Maryland.
War of words between state and Kalshi goes on
Meanwhile, the state also filed its reply to Kalshi’s most recent response motion. Kalshi had argued last week that Nevada was violating a “fundamental principle of the constitution”: the idea that federal law takes primacy over and preempts certain state laws.
However, the state claims the federal law in question — the Commodity Exchange Act (CEA) — also does not support Kalshi’s offering of sports contracts.
“The bottom line is that Kalshi has not plausibly alleged, beyond conclusory allegations, that its sports and political events contracts are swaps or contracts for the sale of a commodity that fall under the purview of the CEA in the first instance,” state’s attorneys wrote.
