Nevada Court Win Tightens Grip on Kalshi Prediction Markets

A federal appeals court has dealt a significant blow to prediction market operator Kalshi, refusing to allow the company to resume trading on sports and election events in Nevada while it challenges a state shutdown order. The ruling, issued by a three-judge panel of the 9th U.S. Circuit Court of Appeals in San Francisco, marks a key victory for Nevada's gambling regulators.

The court determined that Kalshi failed to convincingly argue that federal commodities law overrides Nevada's state gambling statutes. The panel indicated that federal law likely does not prevent Nevada, home to the largest commercial casino market in the U.S., from applying its gaming regulations to Kalshi's sports event contracts. The question of election contracts was sent back to a lower court for further consideration of Nevada's objections.

Nevada's attorney general's office hailed the decision as a major win, stating that the court affirmed the state's longstanding authority to regulate gaming. The office noted that sports betting does not become a different product merely because it is labeled an 'event contract.'

Kalshi, which argues it is a federally regulated 'designated contract market' overseen by the Commodity Futures Trading Commission rather than a betting platform, has said it will seek further review. The company had sought to continue operations in Nevada during the litigation.

The dispute began last year when Nevada's gaming board issued a cease-and-desist order, declaring Kalshi's trading products unlawful in the state. A lower court initially blocked the state from acting, but later dissolved that injunction, prompting Kalshi's appeal.

This case is part of a broader national conflict involving roughly 20 states and platforms like Kalshi, Polymarket, and Robinhood. The 9th Circuit's decision contrasts with an earlier ruling from the 3rd Circuit, which sided with Kalshi against New Jersey's regulators. This split increases the likelihood that the U.S. Supreme Court may eventually settle the question of state versus federal authority over prediction markets.