Nevada sues Kalshi as debate over prediction markets authority heats up

Nevada has escalated its confrontation with prediction market operator Kalshi on Tuesday after a federal appeals court cleared the way for state regulators to proceed with enforcement over the company’s sports event contracts.

The Nevada Gaming Control Board has filed a civil action in Carson City District Court seeking a permanent injunction to halt what it described as unlicensed wagering activity. 

The filing followed a decision by the US Court of Appeals for the Ninth Circuit denying Kalshi’s emergency request to prevent Nevada from taking action while its broader appeal plays out.

State regulators argue that Kalshi’s sports contracts operate in substance as wagers on athletic outcomes and therefore fall under Nevada’s established gaming framework. 

According to the complaint, Kalshi has enabled betting activity without obtaining a state license or complying with the oversight and tax requirements imposed on licensed sportsbooks.

The Attorney General’s office maintains that allowing the platform to continue without licensing would undermine consumer safeguards and regulatory uniformity.

Kalshi, for its part, has renewed efforts to move the dispute into federal court.

In a motion filed after the state lawsuit, the company reiterated that it is “subject to exclusive federal jurisdiction” under the Commodity Exchange Act and overseen by the Commodity Futures Trading Commission. 

It contends that classifying its contracts as gambling requires courts to adopt what it calls an unduly narrow reading of federal commodities law.

Nevada first issued a cease and desist order directing Kalshi to halt sports-related markets within the state in March last year. 

Kalshi responded with a federal lawsuit and was subsequently granted a preliminary injunction, which temporarily shielded the platform from enforcement.

However, in November 2025, US District Judge Andrew Gordon dissolved the injunction, finding that Kalshi’s sports offerings closely resembled traditional betting activity subject to state regulation. 

Kalshi then sought an emergency stay from the Ninth Circuit to preserve its operations during appeal, a request that was rejected this week, prompting Nevada’s latest enforcement move.

In its latest complaint, the Gaming Control Board reiterated that Kalshi’s contracts allow “users to wager on the outcomes of sporting events” and therefore meet the criteria for state licensing. 

Despite making sports betting accessible in Nevada, the regulator argues, the company is not licensed and does not comply with state gaming requirements.

CFTC and Industry stakeholders push back

Nevada’s action unfolds against a wider national confrontation between state gaming authorities and federally registered prediction platforms. 

States, including Massachusetts and Tennessee, have advanced similar claims that sports event contracts amount to unlicensed gambling. 

Enforcement pressure has also touched platforms and intermediaries such as Coinbase, Polymarket, and Robinhood.

Many of whom have also launched lawsuits against Nevada regulators.

CFTC Chair Mike Selig, in the meantime, contends that event contracts “are commodity derivatives and squarely within the CFTC’s regulatory remit,” adding that the agency would “defend its exclusive jurisdiction over commodity derivatives.”

Earlier this week, Blockchain advocacy group the Digital Chamber announced the formation of a dedicated Prediction Markets Working Group that would assist the commission in formal rulemaking.