Nevada gaming regulators are moving to prevent prediction market operator Kalshi from providing sports-related event contracts within the state. This comes after a decision by the 9th US Circuit Court of Appeals that authorizes enforcement measures.
On Tuesday, the appeals court confirmed a November ruling that lifted an injunction which had previously stopped Nevada from enforcing actions against the company. The decision empowers the Nevada Gaming Control Board to continue its efforts to cease Kalshi’s sports-related operations.
Later on the same day, the board initiated a civil enforcement case in Carson City District Court against Kalshi, labeling its activities as unauthorized gambling. The complaint states that Kalshi is currently the sole prediction market in Nevada conducting unlicensed gambling.
According to Jessica Whalen, chief deputy solicitor general at the attorney general’s office, “Kalshi’s ongoing operations endanger the state and public on a daily basis and pose a significant threat to Nevada’s gaming sector. Instead of stabilizing, Kalshi has been aggressively expanding its business.”
Mike Dreitzer, Chairman of the control board, stated that the agency “is steadfast in its duty to protect Nevada residents and gaming patrons, and to preserve the integrity of a flourishing gaming sector.”
<h2>Disputes Over Jurisdiction Escalate</h2>
<p>The lawsuit highlights a broader national dispute regarding <strong>whether prediction market platforms are governed by state gambling laws or by the Commodity Futures Trading Commission (CFTC)</strong>.</p>
<p>On the same day Nevada filed its case, <strong>the CFTC submitted a brief in a related lawsuit in support of companies like Kalshi, asserting that it holds exclusive authority over prediction markets</strong>. Federal representatives argue that their oversight allows companies such as Kalshi to function in all 50 states, including those that prohibit traditional gambling.</p>
<p><strong>Kalshi maintains that its event contracts are classified as swaps, a type of derivative, thus falling under federal commodities regulation versus state gaming laws.</strong> Following Nevada's lawsuit, Kalshi requested that the issue be moved to federal court, asserting that it revolves around the question of CFTC jurisdiction.</p>
<p>Florida-based gaming attorney Daniel Wallach noted on X that <strong>Kalshi's subsequent action could involve appealing to the US Supreme Court for an administrative order</strong> that would permit it to continue its operations in Nevada as the case unfolds.</p>
<h2>Increased State Enforcement</h2>
<p>Nevada officials argue that the provision of sports event contracts is considered wagering under state law and necessitates licensure. In their lawsuit, <strong>the state asserts</strong> <strong>that Kalshi has failed to adhere to gaming regulations</strong>, such as rules preventing anyone under 21 from placing bets and the requirement to implement measures against insider betting and match-fixing.</p>
<p><strong>The Nevada Gaming Control Board issued a cease-and-desist order to Kalshi in March of the previous year.</strong> Since that time, regulators in over 20 states have taken legal action against prediction market companies, temporarily suspending the offering of sports contracts in multiple areas.</p>
<p>If successful, Nevada will become the second state to obtain a court order halting Kalshi's offering of sports event contracts. <strong>In Massachusetts, a judge issued an injunction on February 5 at the request of the state’s attorney general</strong>, although a state appeals court has placed that order on hold while an appeal is underway.</p>
<p><strong>Nevada courts have previously ruled against two other prediction market operators, Coinbase and Polymarket</strong>, prohibiting them from offering event contracts in the state.</p>
<p>Kalshi reports that over $1 billion was traded on the Super Bowl, with approximately 90% of its trading volume connected to sports activities. Meanwhile, roughly half of Polymarket’s trading action pertains to sports.</p>