Federal judge rules against Kalshi in Nevada
A federal judge in Nevada has ruled against predictions market company Kalshi, clearing the way for state gaming regulators to pursue enforcement actions against it.
As reported by Bloomberg, the judgment, made by District Judge Andrew Gordon, found that Kalshi was subject to Nevada’s gambling laws, despite its claim to have exclusive federal oversight.
The decision means that an injunction issued in April that blocked the Nevada Gaming Commission and Nevada Gaming Control Board from acting against Kalshi has now been lifted.
Judge Gordon referred to new information in the case, including Kalshi’s markets that were linked to the timing of football touchdowns, concluding that such sports-based contracts were effectively bets rather than federally regulated swaps.
“Event contracts that turn on the outcomes of sporting events are not swaps and thus do not fall within the CFTC’s exclusive jurisdiction. Kalshi relies on a strained reading of the already convoluted Commodities Exchange Act in an attempt to evade state regulation,” he said.
Kalshi responded by filing an emergency motion to halt the order while it appeals, arguing that it faces the risk of criminal enforcement and potential disruption to ongoing trading activity.
The ruling is the latest chapter in a story of legal disputes across several states over whether prediction markets fall under gambling or derivatives legislation.
Nevada’s case is being closely watched due to the state’s prominence in US gaming regulation and the diverging conclusions reached by courts elsewhere.
Legal analysts, as well as Polymarket founder Shayne Coplan, have noted that the regulation of prediction markets is likely to reach the US Supreme Court.
Speaking after a hearing last week, MGM Resorts International President Bill Hornbuckle thanked the Nevada Gaming Commission for their actions against prediction markets
Charlotte Capewell brings her passion for storytelling and expertise in writing, researching, and the gambling industry to every article she writes. Her specialties include the US gambling industry, regulator legislation, igaming, and more.
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The Backstory
Why Nevada became the battleground
Kalshi’s clash with Nevada regulators has been building for months, driven by a dispute over whether federally regulated event contracts tied to sports are essentially the same as state-regulated sports bets. The company sued after receiving a cease-and-desist letter from the Nevada Gaming Control Board, arguing its Commodity Futures Trading Commission oversight should preempt state action. In early coverage, a federal judge in Las Vegas signaled the case’s stakes by saying he would move quickly to a decision, noting the broader implications for the U.S. sports betting market. That commitment to speed, outlined in a report on the judge’s plan to rule promptly, foreshadowed a ruling that would set Nevada apart from other jurisdictions weighing similar questions.
The legal crux in Nevada centered on whether Kalshi’s contracts, including markets tied to the timing of football touchdowns, were swaps or sports bets. State regulators argued they were bets offered outside the state’s licensing regime, while Kalshi contended its products are federally supervised derivatives. The case also touched Nevada-specific sensitivities, such as constitutional prohibitions against election wagering, though sports markets became the focal point. The judge’s later determination that sports-linked event contracts are not swaps effectively validated Nevada’s position to treat them as gambling products under state law.
The Nevada forum matters because of the state’s role in setting norms for U.S. gaming compliance and enforcement. A loss for Kalshi there carries outsized consequences for how other regulators assess the line between prediction markets and sportsbooks, and for how market operators calibrate their offerings across state lines.
Resort operators pressed to be heard
An early turning point was the push by the Nevada Resort Association to enter the case, a move that underscored the industry’s fear of an unlevel playing field if Kalshi operated outside state rules. The court ultimately allowed the lobby to intervene, as detailed in coverage of the NRA’s successful bid to join the lawsuit. The judge recognized the association’s argument that casinos could face a competitive disadvantage if prediction markets offering sports outcomes avoided Nevada’s standards, such as the minimum age of 21 and strict bet-type limits.
Before that decision, the court had weighed whether to let the group in at all. The request to intervene drew opposition from Kalshi but gained support from the state attorney general’s office. The association represents dozens of casinos that have built compliance systems around Nevada’s comprehensive regulatory framework. Their participation signaled that the case had implications beyond statutory interpretation—touching on market fairness, consumer protections and the integrity of the state’s sports wagering ecosystem.
With the association at the table, the proceedings reflected the tension between incumbents bound by long-standing rules and a federally regulated market entrant seeking to operate under a different regime. That dynamic amplified the case’s significance and likely shaped how the court framed competitive and consumer risk.
Dueling outcomes in New Jersey and Maryland
Even as Nevada moved toward a faster resolution, other state courts issued conflicting rulings that highlighted the unsettled legal terrain. In New Jersey, a federal judge said regulators could not ban Kalshi from offering sports prediction markets while litigation proceeds. That preliminary relief, outlined in a report on the New Jersey decision, affirmed that the company had at least a colorable claim that its federally supervised event contracts can operate in parallel with state regimes—at least for now. The outcome injected momentum into Kalshi’s argument that CFTC oversight should carry weight against state efforts to treat the products as gambling.
Maryland cut the other way. A federal district court there denied Kalshi’s bid to block enforcement by state gaming authorities, concluding the company hadn’t shown a sufficient likelihood of success across its arguments. As reported on the Maryland ruling, the judge found that Maryland’s licensing requirements for sports betting applied to Kalshi’s sports event markets, regardless of federal approvals. Kalshi appealed to the Fourth Circuit, keeping the contest alive but signaling substantial headwinds.
Taken together, the New Jersey and Maryland orders previewed the split that now frames the Nevada outcome: whether event contracts referencing sports outcomes fall within state gambling jurisdiction or are insulated as federally regulated derivatives. Nevada’s prominence means its ruling will reverberate even more than the earlier decisions.
How the Nevada case accelerated
From the outset, Nevada’s court showed urgency. The judge’s plan to expedite the decision, as noted in coverage of his timing pledge, reflected pressure from all sides. State regulators sought clarity to enforce their rules consistently. The resort industry wanted competitive certainty. Kalshi pressed for protection against criminal exposure and interruptions to trading.
The litigation also broadened beyond procedural fights. Arguments touched on whether Kalshi had the operational controls expected of licensed sportsbooks, including age verification and responsible gambling programs. Opponents contended the platform lacked the experience to meet Nevada’s standards and was effectively sidestepping them. Those claims, summarized in the same earlier report, framed consumer protection as a core policy issue, not just a technical jurisdictional dispute.
Against that backdrop, the court’s eventual conclusion that sports-referenced contracts are not swaps and therefore not within the CFTC’s exclusive purview unlocked immediate consequences. By lifting the injunction that had kept Nevada regulators at bay, the ruling positioned the Gaming Control Board and Commission to resume enforcement efforts.
What’s at stake in the appeal
Kalshi’s emergency move to pause the Nevada order while it appeals underscores the immediate risks it faces: potential criminal enforcement, market disruption and the loss of access to a key jurisdiction that often sets the tone for others. The company has pursued a multi-front defense, pairing litigation with a public campaign to distinguish its contracts from wagers and to emphasize federal compliance. But the uneven landscape—relief in New Jersey, a setback in Maryland, and now a pivotal loss in Nevada—creates operational and legal uncertainty.
Industrywide, the stakes are larger than one platform. A Nevada-backed view that sports-related event contracts are bets shifts leverage to state regulators and licensed operators, while a contrary path would invite expansion of federally supervised prediction markets. The resort industry’s successful intervention, detailed in reporting on the NRA joining the case, shows incumbents will press hard to keep that line bright.
The next stages will test whether appellate courts coalesce around a clear framework or deepen the split. If conflicting rulings persist, pressure will build for a higher court to reconcile the boundaries between state gambling authority and federal derivatives regulation—a trajectory observers have anticipated as these cases multiply.
The road ahead for prediction markets
Kalshi’s legal odyssey has already shaped how regulators and operators think about event contracts. In states like New Jersey, where courts have allowed operations to continue for now, companies can keep building markets and customer bases, though with the caveat that the legal ground may shift. In jurisdictions siding with state regulators, including Maryland and now Nevada, the message is clear: sports-based contracts must meet sports betting rules or halt.
For policymakers, the Nevada ruling renews the core question: can a dual system—federal oversight for event contracts and state oversight for gambling—coexist when the events reference sports? Until the appeals run their course, platforms face a patchwork, and bettors face uneven access. What happens next in Nevada will signal how durable that patchwork is, and whether prediction markets can scale nationally without conforming to state-by-state sports betting laws.
