Kalshi, the controversial prediction market platform, faces a major setback in Nevada after a federal judge ruled in favor of state regulators, requiring the company to halt offering sports-related contracts in the state.
U.S. District Judge Andrew Gordon issued a 29-page decision on Monday, dissolving a preliminary injunction that had allowed Kalshi to continue operations for seven months. The ruling supports the Nevada Gaming Control Board’s authority to enforce a cease-and-desist order against the platform.
“Kalshi relies on a strained reading of the already convoluted Commodities Exchange Act (CEA) in an attempt to evade state regulation,” Gordon wrote. “Kalshi’s interpretation would require all sports betting across the country to come within the jurisdiction of the CFTC rather than the states and Indian tribes. That interpretation upsets decades of federalism regarding gaming regulation, is contrary to Congress’ intent behind the CEA, and cannot be sustained.”
Understanding Prediction Markets and the Legal Debate
Prediction markets, which have grown in popularity, allow users to wager on outcomes ranging from politics and pop culture to sports, weather, and financial markets using “yes” and “no” contracts. Kalshi and other companies argue they are already regulated by federal agencies overseeing commodity trading, while Nevada and other state and tribal regulators contend these platforms exploit a loophole to offer unlicensed sports betting.
In April, Judge Gordon initially ruled in favor of Kalshi, issuing a preliminary injunction after the Control Board had ordered the company to cease operations in March. That temporary decision permitted Kalshi to continue offering sports event contracts while the legal dispute unfolded.
The ruling aligns with a broader trend: in October, Gordon denied a preliminary injunction to Crypto.com, a prediction market facing a similar cease-and-desist order, stating that “event contracts that turn on the outcomes of sporting events are not swaps and thus do not fall within the CFTC’s exclusive jurisdiction.”
Ongoing Legal Challenges Across the U.S.
Despite the ruling, Kalshi remains operational in Nevada and plans to request a stay while appealing the decision. Sara Slane, head of corporate development at Kalshi, said, “As other courts have recognized, Kalshi is a regulated, nationwide exchange for real-world events, and it is subject to exclusive federal jurisdiction. It’s very different from what state-regulated sportsbooks and casinos offer their customers. We are evaluating the decision and anticipate making an appeal to the Ninth Circuit.”
The Nevada Gaming Control Board, meanwhile, signaled its intent to oppose any motion to delay enforcement.
Nevada is among at least seven states – including Maryland, New Jersey, Ohio, Montana, Arizona, and Illinois – where regulators have issued cease-and-desist orders against Kalshi and other prediction-market platforms. Lawsuits have also been filed in Massachusetts and by Native American tribes in California and Wisconsin.
The rise of prediction markets has already reshaped the U.S. sports betting landscape. DraftKings and FanDuel, which recently revealed plans to enter the prediction market space, withdrew from Nevada due to state opposition.
The ongoing legal battles highlight a critical question in the industry: whether sports event contracts should fall under federal oversight or remain regulated at the state level, a debate that will likely continue as the courts evaluate these complex cases.
Source:
“Federal judge rules that Kalshi must stop offering prediction contracts in Nevada”, thenevadaindependent.com, November 25, 2025
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