Nevada Temporarily Bans Kalshi Amid Legal Turmoil
A Nevada state judge temporarily banned online prediction market Kalshi from operating within the state on Friday, following regulatory allegations that the platform is running an unlicensed, illegal gambling business that targets underage users.
Nevada Secures Temporary Restraining Order Against Kalshi
The legal setback stems from a lawsuit filed by Nevada officials on behalf of the state’s Gaming Control Board, which sued Kalshi in February. State regulators argue that the prediction platform has failed to secure the mandatory gaming licenses required to host betting activities. Furthermore, authorities allege that Kalshi violates state law by permitting users under the age of 21 to trade on its platform.
In response to the state’s request for immediate intervention, District Judge Jason D. Woodbury granted a temporary restraining order. According to court documents, a formal hearing regarding the injunction has been scheduled for early next month.
The Debate Over “Percentage Games” and Federal Preemption
In his ruling, Judge Woodbury emphasized that Kalshi lacks proper licensing under the Nevada Gaming Control Act. Because the platform charges a commission on contracts traded through its system, the court determined that Kalshi is running what state law defines as gambling—specifically, a “percentage game.”
Kalshi’s Defense: Federal Jurisdiction
Kalshi has pushed back against the state-level accusations, arguing that its registration with the Commodity Futures Trading Commission (CFTC) places it under exclusive federal oversight. The company contends that this federal status should exempt it from individual state gambling laws. However, Judge Woodbury pointed out that the legal question of whether federal law overrides state authority in this sector remains unresolved, noting that recent court trends have not favored the platform’s position.
A Growing Crackdown on Prediction Markets
Kalshi declined to comment on the ruling when contacted. The temporary ban, which was first reported by Wired, is part of a broader regulatory pushback. Reuters reports that Nevada has previously succeeded in blocking other major prediction and betting competitors, including Coinbase and Polymarket.
The litigation in Nevada is just one battleground in a nationwide effort by state regulators to crack down on prediction markets, which they argue operate as unauthorized gambling entities bypassing local consumer protection laws.
State Regulators Clash with Federal Officials
While states are tightening restrictions, federal regulators have taken a highly protective stance toward the prediction market industry. This tension escalated earlier this week when the Arizona Attorney General filed a 20-count criminal complaint against Kalshi, accusing it of operating an illegal gambling enterprise.
Following Arizona’s criminal charges, CFTC Chairman Mike Selig publicly defended the platform, posting online: “The Arizona Attorney General today filed criminal charges against one of our registered exchanges related to prediction markets. This is a jurisdictional dispute and entirely inappropriate as a criminal prosecution. The @CFTC is watching this closely and evaluating its options.”
This escalating friction between aggressive state attorneys general and supportive federal agencies points to an impending constitutional and regulatory showdown over the legal future of US prediction markets.
