Kalshi’s attempt to bypass discovery in its lawsuit against Nevada regulators has been rejected, as a federal judge ruled that fact-finding must proceed before the court can reach a decision.
Kalshi had asked the court for summary judgment, arguing that its case rested solely on legal interpretation and that no additional evidence was necessary. The company maintains that its operations fall entirely under the jurisdiction of the Commodity Futures Trading Commission (CFTC) as a designated contract market (DCM) and are therefore outside the purview of state-level gaming regulators.
The Nevada Gaming Control Board and the Nevada Resorts Association (NRA) disagreed, stating that further information was essential to determine the nature of Kalshi’s sports-related contracts. The NRA, which intervened in the case, also accused Kalshi of using the lawsuit to avoid regulatory scrutiny while gaining a competitive edge in the casino industry.
In her ruling, Judge Brenda Weksler sided with the state and NRA, stating that discovery is necessary—especially regarding whether Kalshi’s event-based contracts meet the definition of a “swap” under federal law.
“Defendants should not be forced to accept Plaintiff’s conclusion that contracts offered on its DCM have independent real-world consequences and thu
s, fall under the exclusive jurisdiction of the CFTC,”Weksler wrote.
She further argued that Kalshi’s ability to self-certify its contracts does not mean the CFTC’s lack of enforcement action equates to legality. The court also agreed that discovery would help assess whether Kalshi could realistically comply with both state and federal gaming regulations.
While the request for summary judgment remains on the table, both parties are now required to set a schedule for the discovery process.
California Tribes Seek Injunction Against Kalshi
Kalshi is also facing mounting legal pressure in California, where a coalition of tribal governments has filed for an injunction in a federal court.
The tribes are demanding that Kalshi be prohibited from offering sports-related event contractson tribal lands, arguing these contracts constitute Class III gaming under the Indian Gaming Regulatory Act (IGRA) and are illegal without tribal-state compacts.
The injunction specifically seeks to block contracts framed as:
- “Will <team> win <title>?”
- “Will <team> win <event>?”
Marketing Claims Prompt False Advertising Allegations
In addition, the tribes are challenging Kalshi’s marketing language, which promotes the platform as offering legal services “in all 50 states.” They argue this constitutes false advertising under the Lanham Act.
“These statements are not susceptible to more than one reasonable interpretation; the only reasonable interpretation is that Kalshi offers ‘sports betting’ and that sports betting is ‘legal in all 50 states.’ These statements are literally false,” the tribes wrote in their legal filing.
Kalshi has consistently asserted that it does not offer sports betting, but rather financial instruments regulated by the CFTC under the Commodity Exchange Act (CEA). It also claims that the contracts are not offered in a format resembling traditional odds, which differentiates them from regulated betting markets.
Still, Kalshi’s activity heavily features sports-related trading. In just the first week of the NFL season, more than $400 million in contracts were traded on the platform, with the majority tied to sports outcomes.
A court hearing on the California injunction is scheduled for October 9, adding another layer to Kalshi’s growing legal challenges.
Source:
“Nevada judge says discovery will proceed in Kalshi case”, sbcamericas.com, Sep 9, 2025.
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