Kalshi faces Nevada lawsuit following failed attempt to block state regulatory action
The prediction market platform is seeking to move Nevada's legal action to federal jurisdiction, maintaining its position that only federal commodity exchange regulations apply.
Kalshi, the prediction market platform, has been sued by the state of Nevada following the company's unsuccessful legal attempt to prevent the state's gaming authority from pursuing enforcement action against its sports-related prediction markets.
On Tuesday, the US Court of Appeals for the Ninth Circuit rejected Kalshi's request to prevent Nevada's gaming authority from proceeding with enforcement measures regarding its sports event contracts, lifting a previous restraint on the regulator's ability to file civil litigation against the platform.
Following this judicial decision, the Nevada Gaming Control Board moved quickly to file a civil enforcement lawsuit in state court targeting Kalshi, claiming the action aims to prevent the platform "from offering unlicensed wagering in violation of Nevada law."
In response, Kalshi quickly submitted a motion requesting the case be transferred to federal court jurisdiction, reiterating its consistent position that the company falls under "subject to exclusive federal jurisdiction" as regulated by the Commodity Futures Trading Commission.
Both the appeals court ruling and the ensuing legal action represent a significant setback for Kalshi in its almost year-long dispute with Nevada authorities over maintaining the availability of its sports-related contracts within state borders. The platform, along with other prediction market operators, is currently defending against multiple comparable legal challenges initiated by various states.
Last March, the company initiated legal proceedings against the state following receipt of a cease-and-desist directive demanding the termination of all sports-related markets operating within Nevada, and the following month in April, a federal judge granted Kalshi's request for a temporary restraining order preventing Nevada from pursuing enforcement actions during ongoing litigation.
Kalshi did not immediately respond to a request for comment.
Nevada says Kalshi is flouting state law
Within its most recent legal filing, the Nevada Gaming Control Board reiterated its previous assertion that Kalshi's sports event contracts satisfy the criteria requiring state licensing, given that they enable "users to wager on the outcomes of sporting events."
"Despite making wagers, sports betting and other gaming activity accessible in the State of Nevada, Kalshi is not licensed in Nevada and does not comply with Nevada gaming law," the regulatory body contended.
Within its motion for federal court jurisdiction, Kalshi maintained that this assertion requires the court "must adopt a narrow interpretation" of federal commodity exchange legislation, under which it claims to be governed through CFTC oversight.
CFTC chair asserts jurisdiction over prediction markets
Earlier the same Tuesday, CFTC chair Mike Selig announced his regulatory body had submitted an amicus brief supporting Crypto.com in a parallel legal case the cryptocurrency platform had initiated against Nevada.
Crypto.com had filed suit against Nevada's gaming authorities in June following its own receipt of a cease-and-desist notification. The exchange subsequently filed an appeal to the Ninth Circuit in November after an unfavorable ruling on its federal court petition to prevent state enforcement measures.
Within its brief submitted to the Ninth Circuit, the CFTC contended that "States cannot invade the CFTC's exclusive jurisdiction over CFTC-regulated designated contract markets by re-characterizing swaps trading on DCMs as illegal gambling."
Selig stated that event contracts "are commodity derivatives and squarely within the CFTC's regulatory remit," and the federal agency would "defend its exclusive jurisdiction over commodity derivatives."
The CFTC's assertive stance follows Trump Media and Technology Group's October announcement regarding plans to introduce prediction markets to Truth Social, its primary social media platform, through a collaborative arrangement with Crypto.com.
Donald Trump Jr., the US president's son, has also been an advisor to Kalshi since January 2025. He has also served as an advisor to rival Polymarket after investing in the company in August.