US-based prediction market operator Kalshi has halted its activities in Nevada following a court’s recent order in the state. Judge Jason Woodbury of the First Judicial District Court in Carson City extended a temporary injunction against the company on March 20 for an additional two weeks, stating that he would soon formalize the written version of the order requested by the Nevada Gaming Control Board.
Legal battles in Nevada and other states
Kalshi, a New York-founded company, offers a market regulated by the US Commodity Futures Trading Commission (CFTC) that lets investors trade on the outcome of various events. The company’s attorneys argued that the contracts traded on Kalshi’s platform are strictly financial swaps governed under federal regulations. Despite this argument, Judge Woodbury maintained that this perspective was insufficient, suggesting that Kalshi’s sports-related contracts essentially resemble wagers offered on platforms licensed under Nevada state gambling regulations.
The Nevada decision is just one part of a complex series of legal challenges Kalshi is facing nationwide. The firm has become a focal point in several state-level lawsuits across the US. In Arizona, criminal proceedings have begun, with the state charging Kalshi with 20 misdemeanor counts related to sports and election-based contracts offered without proper approval. In ongoing litigation in Arizona, federal judge Michael Liburdi recently consolidated a new CFTC-backed lawsuit in Kalshi’s favor into the existing case, announcing that a decision can be expected in the coming week.
Regulatory landscape and commercial impact
The legal status of prediction market platforms like Kalshi remains a contentious issue, both at the state and federal level. While a federal court in Tennessee issued a favorable ruling for Kalshi, similar permission was granted in New Jersey for the company to continue its sports contracts. Conversely, recent decisions in Ohio, Maryland, and most recently Nevada, have gone against the firm. In Massachusetts, an injunction remains in effect pending the outcome of an ongoing appeal.
According to an analysis by TD Cowen, current legal conditions tend to favor state authorities. The firm projected that legal disputes involving Kalshi could reach the Supreme Court, but a definitive ruling is unlikely before 2028.
The mounting regulatory scrutiny now extends beyond the courts. Lawmakers from both parties have introduced new legislation targeting platforms like Kalshi, aiming to prevent CFTC-regulated operators from offering sports and similar contracts. The National Football League (NFL) has also intervened, advocating for a ban on prediction contracts it deems inappropriate for the industry.
Despite the legal headwinds, Kalshi continues to pursue its growth strategy. The company recently secured a major financing round in March, leading to a valuation estimated at nearly $2.2 billion. Kalshi reported trading volumes of $10.4 billion in February alone and has established partnership agreements with leading media and financial platforms, including Robinhood, CNN, CNBC, and Google Finance.
In a public statement, Kalshi warned that banning sports contracts from regulated platforms could simply drive related business overseas. The company further suggested that recent restrictive measures have been influenced by parties with vested interests troubled by increased competition.
Kalshi stated that the prohibition of sports contracts on regulated platforms risks shifting such activities abroad and emphasized that regulatory actions may be motivated by stakeholders concerned with protecting their own interests against competition.
