Nevada Seeks Discovery from Kalshi in Event Contract Lawsuit

Nevada has asked a federal court to compel prediction market operator Kalshi to produce all communications related to its event contracts, including correspondence with the Commodity Futures Trading Commission (CFTC), the federal government, CFTC chair nominee Brian Quintenz, and market makers. 

The request is part of the Nevada's motion for discovery in its legal dispute over whether Kalshi's sports event contracts are permissible under Nevada law.

The motion, filed in the US District Court for the District of Nevada, asserts that the court cannot determine whether federal law preempts state gaming laws without factual evidence about Kalshi's products. The state said it cannot verify or challenge several of Kalshi's claims, such as the potential threat to its business if Nevada blocks its contracts without access to documentation.

Nevada is also seeking records identifying all market makers, lobbying firms, marketing agencies, and public relations contractors linked to Kalshi's Nevada operations and all documents describing the economic impact of the company's event contracts. Requested materials include communications with market maker Susquehanna International Group and Quintenz, whose role as a Kalshi director has prompted conflict-of-interest concerns during his CFTC nomination process.

The discovery push follows an April injunction allowing Kalshi to continue offering sports event contracts in Nevada until the case concludes. Similar legal battles are ongoing in other states, with mixed results for the company.

Dispute over whether Kalshi's platform constitutes gambling

The state's request comes amid a broader debate over how Kalshi's platform should be classified. In July, Josh Sterling of Milbank, counsel for Kalshi in federal litigation, told attendees at a gaming conference that prediction markets differ from sports betting partly because they do not involve setting odds. The statement sparked renewed discussion over the company's marketing and product features.

Kalshi allows users to place funds on sports outcomes and other events nationwide, but is not regulated as a gambling operator. Critics note that the platform offers contract prices in an "American odds" format and has promoted itself with phrases such as "Bet on NBA legally!" in online advertisements. 

Merchandise and social media posts have also referenced betting terminology.

In response to follow-up questions, Sterling said his comment referred solely to Kalshi's peer-to-peer format, in which odds reflect market activity rather than being set by the company. He stated that displaying prices in American odds does not alter that distinction.

A Kalshi spokesperson maintained that using terms like "bet" in promotional materials does not affect the platform's regulatory standing, comparing it to how individuals can "bet" on stocks or derivatives without it being considered gambling.