A Las Vegas man who has traded in prediction markets for years will be paying close attention to a Carson City court hearing Friday to see if he’ll have to devise a workaround if Kalshi is banned from operating in the state.

The Nevada Gaming Control Board is seeking an injunction against Kalshi which the state says is offering sports betting illegally through its prediction market platform. Carson City District Court Judge Jason Woodbury on March 20 issued a temporary restraining order against New York-based Kalshi and set the injunction hearing for Friday.

Kalshi traders, including cryptocurrency startup operator Richard Lee, are awaiting the outcome of the hearing to determine how they’ll be able to keep trading if the plug is pulled on the prediction market, which has been in operation since it was founded in 2018, but came to prominence last year when it began offering markets on the outcome of sporting events.

Nevada gaming regulators identified Kalshi’s operation as a form of sports wagering and took action to shut it down. But Kalshi has fought back and challenged every move regulators made. The Control Board’s newest strategy was to take their legal challenges to state court instead of federal court where they found judges to be more attuned to state gaming laws.

Kalshi has tried to wage the fight in U.S. District Court, but lost an appeal in the Ninth Circuit Court that ordered the case to Carson City District Court.

Lee, who enjoys betting on NFL football and has placed bets in sportsbooks on NFL games, prefers the way Kalshi takes action.

“I find the prediction market ecosystem much healthier,” Lee said in a telephone interview. “Sportsbooks only want the losers, right? They essentially find a way to ban the winners, and then they’re the house. With Kalshi, it’s a much more fair ecosystem where they just take a transaction fee on each trade.”

Lee said he got good enough at sports wagering with sportsbooks that they began limiting his wagers. He switched over to Kalshi and has been trading there ever since, generating income in six figures, he said.

He studied economics in college and said he’s comfortable with federal regulation of the market. He views companies like Kalshi as a market disrupter, similar to the way Uber took share from taxi companies in the late 2000s.

“It obviously was a strategic decision to be regulated federally to allow themselves to enter markets in all 50 states,” Lee said.

It’s unclear what Kalshi will do if it loses in court on Friday since other states, including Massachusetts, have adopted Nevada’s strategy and refiled their cases in state courts.

Some analysts have said they expect Kalshi to appeal its cases to the U.S. Supreme Court if it continues to lose.

Lee gets it that states are unhappy with prediction markets because they don’t pay any state gaming taxes on the revenue they generate like traditional sports books.

The American Gaming Association and other gaming industry advocates also say there are fewer safeguards against underage gambling and fewer programs addressing problem gambling in prediction markets.

Kalshi and other prediction market platforms say the fact they are regulated by the federal Commodity Futures Trading Commission allows them to operate in all 50 states and aren’t subject to state gaming laws.

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