Kalshi has been temporarily banned in Nevada, marking the latest escalation in the widening regulatory war over prediction markets. The First Judicial District Court of Nevada has issued a 14-day restraining order, effective immediately, barring the company from “offering a derivatives exchange and prediction market which offers event-based contracts relating to sports, election, and entertainment related events” without first obtaining gaming licenses.
This may be the first time the company is forced to cease operation in a US state. Massachusetts previously obtained a similar temporary injunction, but Kalshi was able to continue operating there while it appealed the case. Kalshi declined to comment.
This particular legal battle began just over a year ago, when Nevada regulators sent Kalshi a cease-and-desist letter demanding that it stop offering sports-related events contracts. That initiated a messy tug-of-war between plaintiffs and defendants as the case moved between state and federal court. Until now, Kalshi could keep operating in the state as its lawyers sparred with authorities in what the company has described as a “jurisdictional quagmire.”
After the 14 days, the court will then assess whether to extend the ban for the duration of the court case. “The expectation here is that the judge will convert the 14 day TRO to a case-long preliminary injunction,” says gaming lawyer Daniel Wallach.
The ruling comes after a particularly turbulent few weeks for Kalshi. On Tuesday, the Arizona attorney general brought criminal charges against the company, accusing it of running an illegal gambling operation. Just days earlier, Kalshi filed a lawsuit against Arizona state regulators preemptively challenging any effort to make it follow state gambling laws.
Dozens of similar legal battles are underway across the country over whether prediction markets should be forced to abide by state gambling laws, including in Ohio, Tennessee, and Massachusetts.
A number of prominent prediction market platforms, including Kalshi, offer sports-related contracts to people over 18 across the United States, even where state gambling laws prohibit sports betting. The result is that a 19-year-old in Utah can put money on the outcome of a soccer game through prediction markets, but not through sports betting, since the state outlaws it altogether. It also means that a 19-year-old in Indiana can make a similar prediction market wager, even though state gambling law prohibits people under 21 from placing bets. This has made a growing group of bipartisan lawmakers furious.
Kalshi argues that its sports-related event contracts—where, for example, someone can wager on which team would win the Super Bowl or a particular March Madness basketball game—are not a form of betting. Instead, the company says they should be viewed as financial instruments known as “swaps.” So far, the federal government agrees. The Commodity Futures Trading Commission (CFTC), the US agency that oversees swaps and other derivatives markets, maintains that it has exclusive jurisdiction over prediction markets. The agency’s head, Michael Selig, has forcefully rejected claims that the industry should be subject to state gambling laws, telling critics that he will see them “in court.”
The federal government’s stance hasn’t deterred various state attorneys and gaming commissions from continuing their legal fights—and they’ve recently notched some notable victories. In January, Nevada blocked Polymarket from operating within the state; the temporary restraining order is in place through April. It was a victory for the prediction markets-are-gambling side, albeit a limited one: While Polymarket does have a modest official US presence, the bulk of its trading volume takes place on its global exchange, which is technically blocked in the US but accessible to traders willing to use virtual private networks (VPNs) to get around the ban.
