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Nevada gaming board said state-level regulation needed

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Robinhood agreed to halt sports contracts in Nevada

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Kalshi is appealing decision, lawyer declines comment

(Adds details from decision, separate Robinhood order,

comments, DraftKings ( DKNG ) and FanDuel parent stock prices, byline)

By Jonathan Stempel

Nov 26 (Reuters) - A federal judge said the prediction

markets platform Kalshi is subject to Nevada gaming rules,

impeding its ability to expand its sports betting business.

In a decision made public on Tuesday, Chief Judge Andrew

Gordon in Las Vegas federal court sided with the Nevada Gaming

Control Board, and lifted an April 9 injunction that had allowed

Kalshi to continue offering contracts related to sports events

on its exchange.

Kalshi is appealing. A lawyer for the company declined

to comment on Wednesday.

Gordon separately rejected online trading platform

Robinhood's request for a temporary order allowing its

customers to trade sports-related contracts on Kalshi's

exchange.

Robinhood said on Wednesday it will temporarily stop

offering those contracts in Nevada on December 1, "while we work

with the court toward a resolution."

Shares of sports betting companies DraftKings ( DKNG )

and FanDuel parent Flutter rose after Gordon ruled.

Prediction markets let people bet on outcomes of events

such as elections and show business awards, often focused simply

on who wins and loses rather than the degree of victories or

losses.

Though 39 U.S. states and Washington, D.C. have

legalized sports betting, many states and tribal gaming

authorities have sought to exclude prediction markets platforms.

Nevada has outsized influence, as a leader in gambling

regulation and because gaming is particularly important to its

economy.

JUDGE SAYS PUBLIC INTEREST SUPPORTS LETTING NEVADA REGULATE

Known for offering bets on elections, Kalshi argued it

was a so-called designated contract market subject to the U.S.

Commodity Futures Trading Commission's exclusive jurisdiction,

sidelining state regulators.

But the judge said preventing states and Indian tribes

from overseeing sports betting "upsets decades of federalism

regarding gaming regulation, is contrary to Congress' intent

behind the (Commodity Exchange Act), and cannot be sustained."

Gordon also said the public interest supported letting

Nevada regulate, because comprehensive regulation and strict

licensing standards at the state level would protect consumers,

including children and "problem" gamblers.

In similar cases this year, Kalshi prevailed in New

Jersey but lost in Maryland. Both rulings were appealed.

Mike Dreitzer, chairman of the Nevada Gaming Control

Board, said that body will vigorously oppose any effort by

Kalshi to put Gordon's decision on hold during an appeal.