Nevada judge reverses course, orders Kalshi to halt operations in the state

Federal and state regulators are deepening a legal dispute over sports event contracts after a federal judge in Nevada dissolved Kalshi's preliminary injunction that had blocked the state from enforcing a cease-and-desist order.

Kalshi, which operates prediction markets based on real-world events, had argued that its registration with the Commodity Futures Trading Commission (CFTC) places its activities under federal jurisdiction. Nevada regulators maintain the company’s contracts tied to sporting outcomes constitute gambling and therefore require a state license.

Judge rejects CFTC-only jurisdiction interpretation

US District Judge Andrew Gordon issued the ruling Tuesday, writing that Kalshi’s interpretation “would require all sports betting across the country to come within the jurisdiction of the Commodity Futures Trading Commission (CFTC)” rather than state and tribal regulators. He stated that the position “upsets decades of federalism regarding gaming regulation, is contrary to Congress’s intent … and cannot be sustained.”

His decision removes the injunction that had been in effect since April, when Kalshi first challenged Nevada’s March cease-and-desist order. During a hearing earlier this month, Gordon suggested that the outcome could change.

Kalshi said it disagrees with the ruling and intends to appeal.

“We respectfully disagree with this decision,” a Kalshi spokesperson said. “As other courts have recognised, Kalshi is a regulated, nationwide exchange for real-world events and it is subject to exclusive federal jurisdiction. It’s very different from what state-regulated sportsbooks and casinos offer their customers. We are evaluating the decision and anticipate making an appeal to the Ninth Circuit.”

Conflicting state rulings widen legal divide

Courts in multiple states are addressing similar questions, leading to differing outcomes. A New Jersey court granted Kalshi an injunction earlier this year. In Maryland, a judge denied the company’s request for relief, and the case is under appeal.

In California, a judge rejected a motion from tribal parties seeking to block Kalshi’s platform on tribal land, determining that CFTC oversight means the event contracts do not violate the Indian Gaming Regulatory Act. In Wisconsin, the Ho-Chunk Nation filed a related action.

Cases are also underway in New York, Massachusetts, and Ohio, including a Massachusetts hearing scheduled for December 9.

Gordon referenced a previous Nevada case involving Crypto.com, noting in both cases that sports outcomes do not qualify as swaps under the CEA.

“In Crypto, I ruled that event contracts that turn on the outcomes of sporting events are not swaps and thus do not fall within the CFTC’s exclusive jurisdiction,” he wrote.

Nevada regulators press for enforcement

Nevada Gaming Control Board Chairman Mike Dreitzer stated the agency will continue to pursue action against Kalshi and indicated concerns that it remained active in the state. Kalshi indicated it plans to ask the judge to stay his ruling pending its appeal. 

“The Board will vigorously oppose that motion and will continue to expeditiously pursue a path through the courts to stop Kalshi’s unlawful conduct,” he wrote in a notice.

Sports betting is currently legal in 39 states and Washington, D.C. Nearly two dozen state and tribal authorities have moved to prevent prediction markets from offering sports-focused products in their jurisdictions.

Impact on licensed operators exploring products

After executives from DraftKings and FanDuel appeared at the Global Gaming Expo in Las Vegas, the two companies announced plans to develop prediction market offerings. Regulators in multiple states have cautioned that operators could risk their licenses by launching similar contracts without specific approval.

Separately, Gordon denied a request by stock-trading platform Robinhood, which had sought an injunction allowing its users to access Kalshi’s sports contracts. Nevada regulators said Robinhood agreed to stop offering new contracts during legal proceedings.

Kalshi plans to request a stay during its appeal to continue operating.