TLDR
- A Nevada judge issued a 14-day restraining order blocking prediction market Kalshi from operating in the state without a gaming license
- A federal appeals court rejected Kalshi’s emergency request and handed jurisdiction back to Nevada courts
- Arizona’s Attorney General criminally charged Kalshi with running an illegal gambling operation earlier this week
- The CFTC chairman argues federal authority overrides state gambling laws and vows to fight state-level actions
- Major League Baseball signed an agreement with the CFTC and partnered with rival prediction market Polymarket
Prediction market Kalshi is facing legal trouble in multiple states after a Nevada judge issued a temporary restraining order blocking the company from operating there. The order, signed on Friday by Judge Jason Woodbury, bans Kalshi from offering betting contracts on sports, elections, or entertainment events for 14 days.
The Nevada Gaming Control Board requested the halt to protect local consumers from what it considers unauthorized gambling. Kalshi allows users to place bets on the outcomes of real-world events, but it does not hold a Nevada gaming license.
Before the state court acted, a federal appeals court made a key decision on Thursday. It rejected an emergency request from Kalshi that sought to have federal judges block Nevada regulators.
Instead, the federal court sent jurisdiction back to local Nevada courts. That move cleared the way for the Gaming Control Board to push forward with its restraining order.
Kalshi’s Federal Defense Rejected in Nevada Court
Judge Woodbury reviewed the case under Nevada gambling law and determined that Kalshi operates what amounts to a traditional sports pool. Under state law, running a sports pool requires a state gaming license, which Kalshi does not have.
Kalshi argued that the Commodity Futures Trading Commission has full control over all event contracts. The company claimed this federal oversight strips states of any legal authority to intervene.
Judge Woodbury rejected that argument entirely during Friday’s hearing. He said existing law does not support the idea of exclusive federal control at this time.
The judge described the legal situation as complex and fast-moving. He pointed out that allowing an unlicensed company to operate prevents the state gaming board from doing its job.
A new hearing is scheduled for April 3 to consider a longer ban. Kalshi declined to comment on the decision.
Multiple States Take Action Against Prediction Markets
Nevada is not the only state going after Kalshi. Earlier this year, a Massachusetts judge banned the company from offering sports contracts, though a higher court later lifted that ban on appeal.
Arizona took even stronger action this past Tuesday. The state’s Attorney General criminally charged Kalshi with running an illegal gambling operation.
State prosecutors accused the company of operating an unlicensed gambling ring. Kalshi’s CEO responded by calling the charges a massive overstep.
At the federal level, the CFTC chairman has repeatedly argued that federal authority overrides state-level gambling rules. He has promised to challenge these state actions in court.
The federal agency is also working on new policies to govern prediction markets across the country. The goal is to establish a clear federal framework for the industry.
On the business side, Major League Baseball signed a formal agreement with the CFTC this week to help monitor prediction markets. The league also announced a new partnership with Polymarket, a competing prediction market platform.
Courts across the country are still trying to determine whether state or federal governments hold legal authority over these platforms. The next hearing in the Nevada case is set for April 3.
