Nevada has filed a civil enforcement lawsuit against prediction market platform Kalshi, escalating a long-running dispute over whether its sports event contracts constitute unlicensed gambling under state law.
The move follows a ruling by the US Court of Appeals for the Ninth Circuit, which denied Kalshi’s request to block Nevada regulators from taking action. The decision lifted a prior legal barrier and opened the door for the Nevada Gaming Control Board to proceed with its case in state court.
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Kalshi, in turn, has moved to shift the lawsuit to federal court, reiterating its position that it operates under the exclusive jurisdiction of the Commodity Futures Trading Commission (CFTC). The company argues that its contracts are federally regulated derivatives, not state-governed sports bets.
Nevada argues Kalshi’s contracts amount to unlicensed wagering
In its complaint, the Nevada Gaming Control Board claims Kalshi is offering products that allow users to wager on the outcomes of sporting events without obtaining the required state gaming license.
According to the regulator, the structure of Kalshi’s sports contracts fits squarely within Nevada’s definition of betting activity. Because the company is not licensed under state gaming laws, the board argues, it is operating in violation of local regulations.
Kalshi maintains that such an interpretation conflicts with federal commodities law. In its motion to move the case to federal court, the company contends that state regulators cannot override the CFTC’s authority by reclassifying federally regulated contracts as gambling products.
Source: Daniel Wallach
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The dispute comes amid broader tensions between state gaming regulators and federally regulated prediction markets.
On the same day as the appeals ruling, CFTC Chair Mike Selig confirmed that the agency had filed an amicus brief in a related case involving Crypto.com, which is also challenging Nevada over similar cease-and-desist orders. The CFTC argued that states cannot encroach on its exclusive jurisdiction over designated contract markets by labeling swaps trading as illegal gambling.
Kalshi’s battle with Nevada dates back nearly a year. After receiving a cease-and-desist order in March, the company secured a temporary federal court block in April. The latest appeals court decision, however, marks a significant setback and signals that state-level enforcement efforts may proceed while jurisdictional questions remain unresolved.
With multiple states scrutinizing sports-linked prediction contracts, the case could shape how US regulators draw the line between derivatives trading and gambling — and determine whether federal oversight preempts state gaming laws.