The Nevada Gaming Control Board (NGCB) has filed its first response to Kalshi’s efforts in court to keep event contracts related to sports up and running in the Silver State.
The NGCB made a number of arguments about the merits of sports-related event contracts and why it believes the existence of the Commodities Futures Trading Commission’s (CFTC) purview does not override the right of the state to regulate sports betting.
However, the most eye-catching argument about the nature of sports contracts came from Kalshi’s own words.
Kalshi previously said Congress didn’t want sports contracts
The NGCB cited Kalshi’s own argument in its pending case on election event contracts in arguing that sports contracts were never the intent of these markets when Congress passed the Commodities Exchange Act (CEA) in 1936. During those argument, Kalshi argued stridently that election contracts were not “gaming”, and the debate around the definition of gaming was central to oral arguments in the Circuit Court earlier this year.
“An event contract thus involves ‘gaming’ if it is contingent on a game or a game-related event,” the company said. “The classic example is a contract on the outcome of a sporting event; as the legislative history directly confirms, Congress did not want sports betting to be conducted on derivatives markets. Elections, by contrast, are not games or related to games. They are not staged for entertainment, diversion or sport.”
In other words, while Kalshi is arguing in these cases in Nevada and New Jersey that these markets are regulated and covered under federal law, no questions asked, it acknowledged in a separate case that the intent of the law was not to allow sports event contracts.
NV regulators refute Supremacy Clause argument
Kalshi also argued that the Supremacy Clause meant the CFTC and CEA superceded state gaming laws, something the NGCB challenged in its response.
“Kalshi has not alleged facts demonstrating a likelihood of success on the merits. While the Supremacy Clause provides that the laws and treaties made pursuant to the authority of the United States constitute the supreme law of the land (See U.S. Const. art. VI), it is not the ‘source of any federal rights,'” the complaint stated.
In its brief, NGCB noted that for nearly a century state gaming regulations and the CEA have worked together in harmony.
“By enacting the CEA, Congress did not manifest a clear intent to exclusively occupy the entire field of gaming laws. Nor did the NGCB’s enforcement of its gaming laws create an impenetrable obstacle to securing the full purposes and objectives of Congress in enacting the CEA.”
Both groups are set to present oral arguments to the court on April 8.
While there are court cases in Nevada and New Jersey related to cease and desist letters sent by regulators, Kalshi has yet to file cases in Ohio and Illinois, where regulators have also sent cease and desist letters to the financial firm.
