Nevada has officially filed a lawsuit against prediction market platform Kalshi after the company failed to stop state regulators from taking action over its sports-related event contracts.
The legal fight intensified this week when the US Court of Appeals for the Ninth Circuit denied Kalshi’s request to prevent Nevada regulators from moving forward. The decision cleared the way for the Nevada Gaming Control Board to file a civil enforcement lawsuit against the company in state court.
Kalshi quickly responded by filing a motion to move the case back to federal court. The company maintains that it falls under the exclusive jurisdiction of the Commodity Futures Trading Commission (CFTC), arguing that its event contracts are federally regulated commodity derivatives — not gambling products subject to state gaming laws.
This marks a significant setback for Kalshi in its nearly year-long battle with Nevada regulators, as well as in similar disputes unfolding in other states.
Nevada Claims Kalshi Is Offering Unlicensed Sports Wagering
In its latest complaint, the Nevada Gaming Control Board argues that Kalshi’s sports event contracts effectively allow users to wager on the outcomes of sporting events — an activity that requires proper licensing under Nevada law.
According to state regulators, Kalshi is making sports betting accessible to Nevada residents without complying with the state’s gaming framework. The Board is seeking to block what it describes as “unlicensed wagering” in violation of Nevada statutes.
The dispute dates back to March of last year, when Kalshi received a cease-and-desist order demanding that it halt sports-related markets in the state. In April, a federal court temporarily sided with Kalshi, blocking Nevada from taking action while legal proceedings continued. However, this week’s appellate ruling removes that protection.
Kalshi did not immediately comment following the latest developments.
CFTC Backs Prediction Markets’ Federal Oversight
The broader issue at the center of this case is whether prediction markets fall under federal derivatives law or state gambling law.
On the same day as the Ninth Circuit decision, CFTC Chair Mike Selig confirmed that the agency filed an amicus brief supporting Crypto.com in a similar legal battle with Nevada regulators. Crypto.com sued the state after receiving its own cease-and-desist letter over event contracts.
The CFTC argued that states cannot override federal authority by reclassifying swaps trading on designated contract markets as illegal gambling. According to the agency, event contracts are commodity derivatives that fall squarely within its regulatory authority.
The growing tension between federal and state regulators comes as prediction markets gain mainstream attention. In October, Trump Media & Technology Group announced plans to bring prediction markets to its social media platform through a partnership with Crypto.com.
Adding another political dimension, Donald Trump Jr. has served as an advisor to Kalshi since January 2025. He has also advised rival prediction market platform Polymarket after investing in the company last year.
