Nevada’s effort to block the prediction market platform Kalshi is moving through multiple courts, and that could have major ramifications for the brewing battle over sports betting.
A judge on Tuesday denied the company’s request to block the state from taking civil action against it. Nevada regulators claim that Kalshi, through its prediction market contracts, is offering people a way to illegally bet on sports. Kalshi argues it’s merely a financial exchange.
The case, which on Thursday was moved to a federal court, is one of many actions carried out by states as prediction markets explode in popularity. Those companies, most notably Kalshi and its main competitor, Polymarket, have fought back with the support of the Trump administration.
At issue is a question that could determine the future of prediction markets nationwide: Are sites like Kalshi and Polymarket federally regulated financial exchanges — or unregulated sportsbooks operating outside of state gambling laws?
“It’s our view that this is sports betting, plain and simple,” Mike Dreitzer, chairman of the state’s Gaming Control Board, told NBC News on Thursday. “Money is risk-based upon the outcome of sporting events and that is sports betting (not made under the umbrella state regulations) and that’s illegal under Nevada law.”
He declined to comment on the ongoing litigation.
A Kalshi spokesperson declined to comment on Thursday.
The Commodity Futures Trading Commission (CFTC), which oversees the platforms, maintains that they are not gambling.
“CFTC-registered exchanges have faced an onslaught of lawsuits seeking to limit Americans’ access to event contracts and undermine the CFTC’s sole regulatory jurisdiction over prediction markets,” CFTC chairman Michael Selig said in a “friend-of-the-court” brief filed earlier this week — a clear rebuke against Nevada’s enforcement efforts. “This power grab ignores the law and decades of precedent.”
Even over this last week, the current state of play highlights those legal complexities.
On Tuesday, the Ninth Circuit Court of Appeals denied Kalshi’s request to block Nevada from taking civil action against the New York-based platform. That win almost immediately prompted Nevada’s Gaming Control Board to file its suit against Kalshi in state court.
The hope? To gain a restraining order against the platform from operating in the gambler’s paradise of Nevada.
But just days later, Kalshi responded by filing a petition for removal to transfer this Nevada matter to federal court, where the case landed in the courtroom of U.S. District Judge Miranda Du in the District of Nevada.
Without Kalshi moving the matter to federal court, “the Nevada Gaming Control Board would have been in a state court in Carson City, it would have been heard immediately and the state would have won,” said I. Nelson Rose, a specialist in gaming regulations and law professor emeritus at Whittier College in California.
If Kalshi pulls out all the stops in its fight for survival, Rose said the courtroom action could last for years to come.
“So we’re in February of 2026, right? I think that they certainly can stall it. They probably can stall it to 2028 and keep it going in most, if not all, states,” Rose said.
Nevada and Massachusetts are the first two states to file lawsuits against prediction market companies. But nine other states have sent cease-and-desist letters to them.
The Silver State’s attack is noteworthy due to its timing and historical symbolism.
“It was not this aggressive when these cases first started,” said Andrew Kim, a D.C.-based attorney who specializes in sports gambling. “Nevada is now going on the offense.”
Long before the Supreme Court paved the way for states to legalize sports gambling in 2018, Nevada stood as the nation’s lone legal purveyor of sports betting.
In other words, America’s sports gambling capital could set a precedent for how other states approach prediction markets — and how far they’re willing to go to stop them.
“Everybody looks at Nevada as being the leading jurisdiction in the United States when it comes to how we are going to treat gambling,” Rose said.
Already, Nevada has led a bipartisan coalition of 37 states plus the District of Columbia to argue that they should be able to regulate prediction markets as gambling companies.
“You already are seeing a lot of legal action at the state level,” said Matthew Platkin, New Jersey’s former attorney general, who filed a cease-and-desist letter against Kalshi last year. “I think you’re only going to see more.”
In a separate statement to NBC News, the Coalition for Prediction Markets, an industry group that advocates for federal oversight of these exchanges, said: “The CFTC has regulated these markets for decades, and they are best equipped to ensure market integrity.”
“A patchwork of state regimes would create uneven protections for consumers and incentives to move activity offshore, further undermining user safeguards,” the group added.
Legal experts say the question could ultimately be decided by the country’s highest court.
“I’ve always viewed this as eventually going to the Supreme Court,” said Kim. “It’s just a matter of when.”
