Prediction market Kalshi has filed a lawsuit against Nevada Gaming Control Board and New Jersey Division of Gaming Enforcement after receiving cease and desist orders to pause sports-related contracts. Kalshi argues that the contracts fall under the jurisdiction of the Commodity Futures Trading Commission (CFTC) and cannot be regulated by state authorities. The legal team contends that Kalshi’s event contracts are two-sided markets trading as swaps, not the traditional sports-betting model. Kalshi co-founder Tarek Mansour emphasized the importance of prediction markets as an innovation of the 21st century and vowed to defend the technology in court.
In a separate development, the CFTC announced a regulatory pivot to focus on fraud instead of regulation through enforcement actions, a move welcomed by industry firms. The regulator also initiated a probe into Super Bowl event contracts offered by Kalshi and Crypto.Com to ensure compliance with existing derivatives laws. Ultimately, the CFTC took no action to ban the contracts. This legal battle and regulatory shift highlight the complexities and evolving landscape of prediction markets in the US.
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