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The Nevada Gaming Control Board has filed a civil enforcement action against Kalshi, seeking to block the prediction market operator from doing business in the state. The move follows a ruling by the 9th Circuit Court of Appeals that paved the way for Nevada to enforce its gaming laws against the company.
The legal battle centers on whether Kalshi’s sports event contracts constitute gambling under state law. Jessica Whalen, Deputy Solicitor General, wrote to the court stating, “Since filing its stay motion, Kalshi has continued to dramatically expand its business, rather than attempting to maintain any kind of status quo. Kalshi has massively increased its trading volumes, and has aggressively marketed its sports bets as ‘100% legal’ in ‘all 50 States.'”
Whalen emphasized that “every day that Kalshi operates in violation of Nevada law causes substantial irreparable harms to the State of Nevada, the gaming industry in this state, and the public interest.” The state contends that Kalshi is currently the only prediction market operating in Nevada.
At the heart of the dispute are Kalshi’s sports event contracts, which drive significant volume on the exchange. Nevada argues that prediction market operators cannot offer derivatives that amount to sports bets without holding state gaming permits. Kalshi and other prediction markets cite federal preemption, arguing that as firms regulated by the Commodities Futures Trading Commission, federal regulations should supersede state guidelines.
However, courts have consistently sided with states in recent challenges, agreeing that companies like Kalshi are offering gambling services without the necessary licenses. The Nevada Gaming Control Board stated, “The Board considers offering sports event contracts to constitute wagering activity under NRS 463.0193 and 463.01962 and, therefore, entities offering such event contracts must be licensed.”
The case has taken on political dimensions, with the Trump Administration voicing support for prediction markets like Kalshi and Polymarket, while Senate Democrats align against the industry. Donald Trump Jr. serves as an advisor to both Kalshi and Polymarket, and his venture capital firm, 1789 Capital, has invested in Polymarket.
