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- Nevada sues Kalshi, alleging its sports event contracts qualify as unlicensed gambling.
- Kalshi argues CFTC oversight preempts state rules, pushing to move the case to federal court.
- States expand actions against prediction markets as regulators clash over jurisdictional control.
The Nevada Gaming Control Board has filed a civil enforcement action against Kalshi, alleging the federally regulated prediction market offered unlicensed wagering in the state.
The complaint, submitted in Carson City District Court, argues that Kalshi’s sports-linked “event contracts” qualify as gambling under Nevada law. Regulators say the contracts were available to Nevada residents without approval and therefore violate state requirements for licensed operations.
Nevada is seeking declaratory relief and an injunction. Regulators want a court order stopping Kalshi from operating in the state unless the company secures a gaming license. They also say the violations breach several provisions of Nevada’s gaming code.
Kalshi Defends CFTC Oversight in Nevada Enforcement Clash
Board Chairman Mike Dreitzer said the agency will continue to protect residents and gaming participants. He noted that state law gives the Board a clear mandate to oversee any activity that functions as wagering.
Kalshi moved quickly to shift the dispute to federal court. The company repeated its long-standing claim that it falls under the exclusive jurisdiction of the U.S. Commodity Futures Trading Commission. The firm operates as a CFTC-designated exchange and says its contracts are financial derivatives rather than bets.
Kalshi maintains that federal law preempts state gaming rules. The company argues that its products are within the CFTC’s regulatory structure and do not require approval from state gambling authorities.
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Nevada rejects that position. Regulators say contracts linked to sports results are similar to sportsbook bets. They argue the products fit the state’s definition of gambling and therefore require licensing. The Board said allowing unlicensed operators would erode Nevada’s controlled regulatory structure.
Nevada Widens Pressure on Prediction Markets
The state has also filed a separate lawsuit against Coinbase. The lawsuit pertains to prediction markets developed through a partnership with Kalshi. The Nevada regulators have stated that the lawsuits share the same concerns regarding unapproved wagering products.
This legal action is part of the national debate regarding prediction markets. Maryland, New Jersey, Ohio, and Tennessee have taken action regarding similar prediction markets. The states have issued cease-and-desist orders or lawsuits in an attempt to halt unlicensed sports event contracts.
Federal regulators have pushed back. The CFTC has defended its authority over event contracts in several legal disputes with Kalshi. The latter has won reprieves in court, but the cases have been narrow ones.
The question is who governs the prediction markets space, which is growing in size. The Nevada ruling may impact the regulation of this space under either federal or state gambling laws.
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