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Nevada’s gaming regulator has asked a state court to halt the operations of New York-based prediction market platform Kalshi. In a lawsuit filed Tuesday, Feb. 17, the Nevada Gaming Control Board (NGCB) stated the operator is offering products that amount to unlicensed sports wagering inside Nevada.
Notably, the board is not seeking a permanent ban at this time; instead, it is requesting a temporary restraining order to stop Kalshi from offering “sports event contracts” while the legal merits are debated.
Why Nevada calls prediction markets wagering
The core of the state’s complaint is that offering sports event contracts and related event-based offerings constitutes “wagering activity” under Nevada law. The state’s conclusion is direct: If it is wagering, the company offering it must be licensed. Nevada alleges that Kalshi has failed to comply with fundamental rules governing the industry, most notably the strict prohibition on anyone under 21 years old from placing a wager.
Beyond age limits, the complaint outlines the rigorous integrity protections Nevada requires for any sports-related betting. These include sophisticated safeguards designed to limit “insider” activity by participants—such as players, coaches, or referees—as well as comprehensive measures to detect and prevent match-fixing.
The state contends that these protections should not disappear or be bypassed simply because a product is rebranded as a “contract” and offered through a prediction market.
Federal swaps or state bets?: A jurisdictional tug-of-war
The path to this lawsuit was paved by a series of high-stakes legal maneuvers. Kalshi had previously been shielded by an injunction that prevented Nevada authorities from enforcing state laws against the operator. However, that protection evaporated following a judge’s November order dissolving the injunction. On Tuesday, a federal appeals court declined to pause that decision, prompting Nevada to move quickly with its filing.
As reported by The Guardian, in its response, Kalshi petitioned to transfer the case to federal court, framing the dispute as a matter of federal oversight. The operator argues that the central issue is whether the Commodity Futures Trading Commission (CFTC) has exclusive jurisdiction.
Kalshi contends its event contracts are technically “swaps”—a type of derivative contract—which would place them solely under the authority of federal regulators. This claim, if upheld, would leave states like Nevada without the power to block such platforms through traditional gambling laws.
A national wave of prediction market crackdowns
On the same day Nevada filed its suit, the CFTC filed a brief in related litigation supporting the view that it holds exclusive jurisdiction over prediction markets. This intervention places the federal regulator at direct odds with a growing movement of state gaming agencies. If Kalshi’s jurisdictional argument succeeds, it could set a precedent limiting a state’s ability to police any sports-linked event contracts.
Nevada is not the only state pushing back. On Feb. 5, a Massachusetts judge issued an injunction at the request of the state’s attorney general to prohibit Kalshi from offering sports contracts. While a state appeals court justice stayed that order on Tuesday pending appeal, the move signals a tightening net around the platform.
Nevada has already successfully targeted other operators, persuading judges to issue orders barring Coinbase and Polymarket from similar activities.
Preemption or prohibition: The road to the Supreme Court
The immediate question for the Carson City District Court is whether to grant the temporary restraining order. Beyond the procedural hurdles, the case presents a fundamental question for the modern era: When a contract tied to a sports outcome is traded on a digital market, does it remain a financial instrument, or does it cross the line into state-regulated wagering? Nevada is betting that the court will choose the latter.
