Nevada’s gaming companies have invested millions of dollars in their sportsbooks since casinos took their first sports wagers in 1949.

Betting on sports and racing is widely viewed in the industry today as a means of getting customers through the doors to bet on other games of chance that are more profitable to casinos than sports bets or to spend on nongaming attractions within the casino.

In May 2018, other states nationwide were enabled to offer legal sports betting, thanks to the U.S. Supreme Court’s 7-2 vote to overturn the Professional and Amateur Sports Protection Act of 1992.

The PASPA decision started a wave of sports-betting legalization that has resulted in 39 states and Washington D.C. allowing bets, producing $115 billion in gaming revenue, an economic impact of $328.6 billion and $52.7 billion in taxes and tribal revenue sharing in 2024. All are tightly regulated in their respective states and tribal jurisdictions.

Kalshi invasion

But suddenly, out of the blue, event-based trading invaded the space.

Kalshi Inc., founded in 2018 in New York by CEO Tarek Mansour and Chief Operating Officer Luana Lopes Lara, became the first company to offer a financial exchange and prediction market. It sold its first contracts in July 2021. Other companies, Crypto.com and Robinhood, have since entered the market.

Kalshi bills itself as the first regulated exchange in which people can buy and sell contracts on the outcome of events. Contract prices reflect the view of traders as to the chances of the event happening.

What that means is that participants can attempt to predict the outcome of a current event and purchase a contract that will pay off if the event occurs.

Kalshi event prediction topics have a wide range, from current events and politics to the weather and entertainment. All propositions are posed as a yes-or-no question. Recent contract offerings asked, “Will the National Guard leave Los Angeles before Aug. 1, 2025?” and “Will there be a new U.S.-Iran nuclear deal this year?”

It’s easy to start trading by signing up and funding an account through the Kalshi website. Most propositions are based on $1 values with totals reaching just over $1, with the more favored side having the high amount, the less favored side having the low amount and any amount over $1 considered a transaction fee collected by the company. Investors can place up to $25,000 on either side of a contract.

Accurate predictions

Kalshi boasts on its website that its market participants are remarkably accurate in their assessments.

“Our inflation and federal rate forecasts have been more accurate than economists, pundits and traditional news outlets over the past year,” the Kalshi website says.

Kalshi got on Nevada’s radar in late 2024 when the company won a lawsuit that permitted it to offer prediction contracts on elections. Betting on elections is forbidden by Nevada’s Constitution.

In late 2024 and early 2025, Kalshi stepped up its offers on sporting events and the yes-or-no propositions looked very similar to a typical sports bet.

That’s when the Nevada Gaming Control Board fired off a cease-and-desist letter to Kalshi warning it that it was in violation of Nevada gaming laws and that in order to offer prediction contracts on sports it would have to be vetted and licensed.

Kalshi responded with a lawsuit that month, naming Control Board Chairman Kirk Hendrick and board members George Assad and Chandeni Sendall as defendants.

Kalshi defended its belief that it is entitled to offer contracts on sports outcomes, saying that it’s regulated federally by the Commodity Futures Trading Commission and that federal regulation supersedes any state regulatory oversight.

NRA intervenes

The state girded to defend itself in the lawsuit to protect the regulatory side of sports gambling in the state. But the ones who stand to lose the most are the gaming companies that have invested millions in their sportsbooks. That’s why the Nevada Resort Association filed a motion in U.S. District Court to intervene on the Kalshi case. District Judge Andrew Gordon ruled in June that the NRA could become part of the action, giving the state a new ally to fight the upstart Kalshi.

Is Kalshi’s prediction market presence a threat to sports betting in Nevada and other states that offer it?

In its court documents seeking intervention, the NRA said Kalshi’s unregulated presence in Nevada would be “seismic.”

Rep. Dina Titus, D-Nevada, also is among those hoping the company won’t get a foothold in gaming.

She’s concerned that the Commodity Futures Trading Commission doesn’t have the means to control underage gambling, or gambling by illegal players attempting to launder money. She also said unlike casino companies, Kalshi has no program addressing problem gambling.

She also noted a political connection between Kalshi and sports betting. President Donald Trump nominated Brian Quintenz, a Kalshi board member, to become the next chairman of the federal agency that regulates futures markets. Last week, members of the Senate Agriculture committee — the Commodity Futures Trading Commission fundamentally reviews trading for agricultural products — grilled Quintenz in a hearing.

It’s unclear when a full Senate confirmation hearing for Quintenz will occur. Senate Agriculture Committee Chairman John Boozman is expected to schedule a meeting to vote on advancing Quintenz’s nomination. If approved, the nomination would be placed on the Senate executive calendar for a full Senate vote. Then, a simple majority is required for confirmation. This entire process may take as little as a few weeks or as long as several months to complete.

“The Senate must reject Brian Quintenz’s nomination for chairman of the Commodity Futures Trading Commission,” Titus said in a statement. “His testimony illustrates how dangerous his appointment would be, including how he plans to transform this important agency into a rubber stamp for unregulated, illegal sports betting nationwide. Mr. Quintenz’s conflict of interest as a board member of Kalshi and disregard for agency processes and procedure make it clear that he is the wrong person to lead the CFTC. The agency should be a strong, independent regulator, not a puppet for the president and his family. I thank my colleagues, including Sens. Adam Schiff and Cory Booker, who raised critical concerns during this hearing and urge the full Senate to reject his nomination.”

In January, Trump’s son, Donald Trump Jr., became an adviser to Kalshi.

Rapid progression

In an interview with the Review-Journal, Titus said she is amazed at how rapidly the issue of Kalshi as a sports-betting provider has progressed.

“We first saw it when they were talking about betting on election outcomes. And we warned the AGA (American Gaming Association) and we talked to the NRA that this is coming fast. And nobody quite realized how fast it would move. And now, states are starting to get on board. The NRA is weighing in. This guy’s (Quintenz) on the board of Kalshi, the biggest company that does this, and he doesn’t seem to think there’s anything wrong with it. But it’s just a total way to get around any state laws concerning sports betting.”

Titus said she fully expects the matter would ultimately be decided by the courts.

“More and more states are getting involved in it,” she said. “It’s not just Nevada. You’ve got Maryland, New Jersey and Nevada that have gotten lawsuits. And then you’ve got Montana, Ohio, Illinois and Arizona that have sent cease-and-desist letters. And then you’ve got Massachusetts, Michigan, Pennsylvania and Connecticut that have launched investigations. Now, they (Kalshi) won in the first round with Nevada and New Jersey, but now there’ll be appeals for this, and now the Nevada Resorts Association is intervening. So I think this is going to play out in the courts and that may take a long time.”

She said legislative action is an option, but the challenge of that is educating lawmakers about the consequences to the casino industry if court decisions go Kalshi’s way.

Kalshi has not responded to requests for comment, but a gaming industry analyst said some good for the gaming industry may come out of the company’s bold moves.

“I’m excited to see what happens as a result of all of the conversations and all of the differing opinions on both sides of this argument,” said industry analyst Josh Swissman, founding partner and managing director of Las Vegas-based GMA Consulting.

“I will tell you that ultimately to have an environment where you have one set of operators that operate within one regulatory, operating and taxation framework and then you have a second set of operators that operate in a completely, very completely different set of regulatory, taxation and operating frameworks that that is not a long-term recipe for success.

“I think what you will see is the coalescence of the two types of environments at some point in the future,” he said. “I can’t tell you what that looks like, but I can tell you that the gaming industry and sports wagering, particularly on these types of propositions, has been around a lot longer than these prediction markets have. And so there’s a lot more in terms of protection mechanisms and infrastructure and everything else than there is in the other.

Supreme Court bound

Andrew Kim, a partner in the global Goodwin law group’s appellate and Supreme Court litigation practice based in Washington D.C., has written extensively about Kalshi’s gaming prediction market. He believes the lawsuit boils down to a federal vs. states’ rights issue that ultimately will be heard by the Supreme Court.

“It seems unavoidable that this will end up at the Supreme Court someday,” Kim said in a Review-Journal interview. “I think a lot of that will depend on who wins and in what order. I think we’re going to see battles across the country not just by the states but I expect that the tribes might get involved at some point.

“It’s a matter of whether the (Supreme) Court shows any interest in taking these issues up,” he said. “Is it a state vs. federal argument? 100 percent.

“The fights with Maryland, Nevada and New Jersey are all about federalism and did Congress intend to in allowing these contracts to exist and letting the CFTC regulate these gaming-related event contracts or did Congress intend to kick out state regulators and prevent them from regulating these contracts as gaming instruments as bets and wagers. That’s the question.”

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