Nevada Launches Lawsuit Against Kalshi After Court Ruling

The state of Nevada in the United States has initiated legal proceedings against Kalshi following the prediction market platform’s unsuccessful court challenge to prevent the state’s gaming authority from pursuing actions related to its sports prediction markets.

On Tuesday, the US Court of Appeals for the Ninth Circuit rejected Kalshi’s request to halt Nevada’s gaming regulator from proceeding with measures against its sports event contracts. This ruling lifted the previous injunction, allowing the regulator to move forward with a civil lawsuit targeting the company.

Immediately after the appeals court’s decision, the Nevada Gaming Control Board filed a civil enforcement complaint in state court against Kalshi. The board stated that the action aims to prevent the company from providing unlicensed wagering that contravenes Nevada statutes.

In response, Kalshi quickly submitted a motion to transfer the case to federal court. The company reiterated its longstanding position that it falls under exclusive federal oversight through the Commodity Futures Trading Commission.

This appeals court ruling and the ensuing lawsuit represent a significant setback for Kalshi in its ongoing, nearly year-long dispute with Nevada over maintaining its sports contracts available within the state. Both Kalshi and other prediction market operators are contending with comparable legal challenges from various other states.

Kalshi first took legal action against the state last March after being issued a cease-and-desist order demanding it stop all sports-related markets in Nevada. Subsequently, in April, a federal court granted Kalshi a temporary injunction, blocking Nevada from enforcing actions during the litigation process.

Source: Daniel Wallach

Kalshi has not yet provided a response to requests for comment on these developments.

Nevada Claims Kalshi Violates State Gambling Regulations

In the most recent lawsuit, the Nevada Gaming Control Board has restated its earlier assertions that Kalshi’s sports event contracts qualify as activities requiring licensure under state regulations. These contracts enable users to place bets on the results of sporting events, according to the board.

Although Kalshi’s platform facilitates wagers on sports betting and various gaming options accessible within Nevada, the company lacks the necessary state license and fails to adhere to Nevada’s gaming statutes, the regulator contends in its filings.

Kalshi, in its motion to the federal court, countered that accepting such a characterization by the state would necessitate a restrictive reading of federal commodity exchange legislation, under which the company maintains it is properly supervised by the CFTC.

CFTC Leader Defends Agency’s Authority Over Prediction Markets

Earlier that same Tuesday, CFTC Chairman Mike Selig announced that his agency had submitted an amicus brief in support of Crypto.com amid a parallel legal battle the cryptocurrency exchange waged against Nevada regulators.

Crypto.com had filed its lawsuit against Nevada’s authorities in June, prompted by a cease-and-desist notice similar to Kalshi’s. The exchange then appealed to the Ninth Circuit in November after a federal court denied its request for an injunction against state enforcement.

In the brief presented to the Ninth Circuit, the CFTC maintained that states lack the authority to encroach upon the agency’s exclusive domain over designated contract markets regulated by the CFTC by reclassifying swaps trading on these markets as prohibited gambling activities.

Selig emphasized that event contracts constitute commodity derivatives that fall directly within the CFTC’s regulatory responsibilities. He affirmed that the commission intends to protect its sole jurisdiction over such commodity derivatives.

This assertive stance from the CFTC follows announcements from Trump Media and Technology Group in October, revealing plans to integrate prediction markets into its primary social media platform, Truth Social, through a collaboration with Crypto.com.

Additionally, Donald Trump Jr., son of the US president, has been serving as a strategic advisor to Kalshi since January 2025. He has also taken on an advisory role with competitor Polymarket subsequent to his investment in the firm during August.