Nevada Claims Kalshi Weakened Argument by Accepting NC Tax

Gaming attorney Joshua Kirschner was quoted in an SBC Americas article analyzing Nevada's argument that Kalshi weakened its federal preemption position by accepting North Carolina's new tax on prediction markets. Kalshi faces multiple lawsuits from state attorneys general (AGs) arguing its prediction market platform falls under state and Tribal regulatory authority as a gambling operation, while the company counters it is governed under the federal Commodity Exchange Act (CEA) that preempts state laws. The filing from Nevada Deputy AG Abigail Pace comes before the U.S. Court of Appeals for the Ninth Circuit and references North Carolina S.B. 257, which created a 6 percent levy on prediction market revenue. Kalshi responded by stating it is possible to be regulated federally while still paying state taxes. Josh, who serves as the deputy team leader of Holland & Knight's Gaming Team, called that a fair statement "in a vacuum" and talked about the nuances that arise when trying to draw a line between accepting state-level requirements and tacitly conceding a preemption defense.

"A state levying a tax within certain parameters does not necessarily eliminate preemption arguments," he explained. "I do think the North Carolina law, which was clearly written very carefully, does satisfy that narrow scope of a tax focused on state apportionment that does not discriminate in any meaningful way and is not kind of a stand-in for actual regulation of a field. I think it's on safe ground there."

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