A federal judge in Nevada has ruled that Kalshi, the prediction market operator, must adhere to the state’s gaming regulations, lifting a stay that previously limited enforcement actions. Chief US District Judge Andrew P. Gordon determined that Kalshi’s sports-based event contracts are wagers under Nevada law, rather than federally regulated derivatives under the Commodity Exchange Act. The ruling emphasizes the importance of preserving state regulatory authority, warning that a broad federal preemption could undermine longstanding federalism principles in gambling oversight.
The court highlighted Nevada regulators’ concerns that Kalshi’s contracts resemble unlicensed sports bets, noting that the operator’s own marketing reflects this characterization. The decision also considered potential risks to public welfare, especially regarding contracts offered to individuals under 21 or without mandated consumer protections. Judge Gordon ruled that the balance of hardships favored Nevada, with any financial impact to Kalshi mitigated through geofencing and existing compliance measures.
Kalshi promptly filed an appeal to the US Court of Appeals for the Ninth Circuit, aiming to overturn the decision and maintain operations without state oversight. Meanwhile, the Nevada Gaming Control Board has confirmed that it will continue enforcing compliance, reaching agreements with other operators, such as Robinhood and Crypto.com, to halt new sports-event contracts within the state. Kalshi, however, has declined to reach a similar agreement.
The ruling has broader implications for event-based markets, potentially shaping federal court interpretations of the Commodity Exchange Act and clarifying the boundary between federal and state jurisdiction in emerging gaming sectors. Operators nationwide will likely monitor the appeal closely, as it could influence both regulatory strategy and market access for prediction-based platforms.
