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State of Play
- The Ninth Circuit denied Kalshi’s emergency request to pause Nevada enforcement, leaving the prediction market operator exposed to immediate state action.
- This procedural loss paves the way for Nevada to file a civil enforcement case and likely seek a temporary restraining order.
The Ninth Circuit on Tuesday rejected Kalshi’s motion for an administrative stay, removing a short-term legal shield that would have blocked Nevada regulators from pursuing civil enforcement while broader appeals proceed.
The denial, flagged on X by attorney Daniel Wallach, means Nevada can file an enforcement action and is expected to seek a temporary restraining order that would likely force Kalshi to suspend operations in the state.
The dispute centers on whether Kalshi’s event-based contracts are federally regulated derivatives under the Commodity Futures Trading Commission, or whether states can treat them as unlawful sports betting. Kalshi has argued federal pre-emption as a CFTC-regulated exchange; Nevada regulators maintain they have jurisdiction over products offered to state residents.
Decision gives short-term leverage to states
Operators offering similar prediction markets face broader regulatory risk. This ruling shifts near-term leverage to state regulators and underscores that federal CFTC oversight may not automatically block state enforcement actions.
With no administrative stay, Nevada can move rapidly. Filings could arrive as soon as the same day the decision was posted, and a temporary restraining order is expected within days.
Kalshi’s likely responses include seeking emergency relief from the US Supreme Court via the shadow docket, but such relief is discretionary and reserved for cases showing immediate, irreparable harm.
The Ninth Circuit decision doesn’t settle the underlying legal issues; instead, it shifts short-term leverage to Nevada and signals an intensifying national test of where CFTC jurisdiction ends and state gambling authority begins.
Based on reporting by Sebastian Sinclair for Decrypt.
