Nevada keeps Kalshi sidelined on sports bets

Kalshi’s push to keep offering sports-linked prediction contracts in Nevada suffered another setback on 3 April, when Carson City District Court Judge Jason Woodbury said he would grant a preliminary injunction preventing the New York-based platform from operating in the state without a gaming licence. The judge said the contracts were effectively no different from conventional sports betting, extending an earlier temporary restraining order through 17 April while the longer-term injunction is finalised.

Woodbury’s remarks went to the centre of a widening legal clash over whether event contracts tied to sport, elections and entertainment should be treated as federally regulated financial instruments or as gambling subject to state controls. In court, Kalshi argued that its contracts are swaps falling under the exclusive jurisdiction of the Commodity Futures Trading Commission. The judge rejected that reasoning, saying that placing money on a baseball outcome through Kalshi was, in practical terms, the same as doing so through a licensed sportsbook.

Nevada’s case has become one of the most closely watched tests of how far states can go in policing prediction markets that have expanded quickly beyond their original niche. The Nevada Gaming Control Board has argued that Kalshi’s sports contracts amount to wagering under state law and that the company has not complied with core gaming safeguards, including licensing requirements, age limits and measures aimed at preventing insider betting and match-fixing. In its February complaint, the state said the platform was effectively running an unlicensed sports pool.

That state view is colliding with an increasingly assertive federal stance. On 2 April, the Trump administration sued Arizona, Connecticut and Illinois, saying their attempts to curb companies such as Kalshi, Polymarket, Crypto. com and Robinhood intruded on the CFTC’s exclusive authority over national swaps markets. The agency’s complaints argue that event contracts traded on federally regulated exchanges fall within a comprehensive federal framework and cannot be shut down by state gambling regulators simply because states consider them wagers.

The legal picture, however, is far from settled. Nevada is, for now, the only state with a court-enforced ban actively in effect against Kalshi. Massachusetts obtained an injunction earlier this year blocking Kalshi’s sports-event contracts, but that order was put on hold pending appeal. Arizona has moved even more aggressively, becoming the first state to pursue criminal charges against Kalshi for allegedly operating an illegal gambling business. At the same time, Kalshi and similarly placed operators have continued to press pre-emption arguments in multiple jurisdictions, with mixed results.

What makes the dispute especially significant is that it reaches beyond one platform. Sports-event contracts are part of a broader category of event contracts whose payoff depends on whether a specified event occurs. The CFTC says such contracts can be lawful derivatives when traded on regulated exchanges, yet its own rulebook also states that contracts referencing gaming, unlawful activity, or similar matters contrary to the public interest are prohibited. That tension has become harder to ignore as exchanges increasingly list products that resemble wagers on sports scores and tournament outcomes more than traditional hedging instruments.

The regulator’s own policy has also shifted. The CFTC announced in February that it was withdrawing an earlier event-contracts rule proposal and a staff sports-event contracts advisory. It then moved in March to seek further public comment on prediction markets, while continuing to defend its exclusive jurisdiction in court filings. That combination has left the market with regulatory uncertainty: firms can point to federal oversight and self-certification procedures, while states and tribal gaming interests argue that the products threaten established gambling regimes and consumer protections.

For Nevada, where gaming law has long been treated as a core state function, the case carries commercial as well as constitutional weight. Regulators say allowing unlicensed event-contract platforms to operate alongside tightly supervised sportsbooks would create an uneven field and weaken protections designed for one of the country’s most heavily regulated betting markets. For Kalshi and its backers, the bigger concern is that if states can classify federally traded event contracts as gambling whenever they dislike the subject matter, the national market for prediction products could fracture into a patchwork of conflicting local restrictions.