A judge in Nevada has issued a temporary restraining order that prohibits prediction market operator Kalshi from conducting business in the state without the necessary licensing. This decision marks a significant development in the ongoing legal confrontation between state regulators and the prediction market industry.
Judge Jason Woodbury of the Carson City District Court granted this order following a request from the Nevada Gaming Control Board. The ruling prevents Kalshi from providing event contracts related to sports, elections, and entertainment to residents of Nevada.
The court determined that these contracts could be considered unlicensed gambling according to state law. Previously, Kalshi had been operating a 'sports pool' under Nevada's gaming regulations. A hearing is set for April 3 to discuss the possibility of a longer-term preliminary injunction.
Kalshi contends that its contracts should be regulated exclusively by the Commodity Futures Trading Commission. However, the court rejected this argument, affirming the jurisdiction of Nevada regulators to enforce state laws.
Mike Dreitzer, a representative of the Nevada Gaming Control Board, stated, 'Prediction markets that enable unlicensed gambling are illegal in Nevada, and we have a statutory obligation to safeguard the public.'
This ruling is part of a broader wave of legal challenges facing Kalshi across various states in the U.S. A court in Massachusetts has already issued an injunction preventing the company from offering sports-related event contracts, although this decision is currently on hold pending an appeal. Additionally, Arizona has initiated criminal proceedings against Kalshi, becoming the first state to take such action.
In a related development, the U.S. Court of Appeals for the Ninth Circuit denied Kalshi’s emergency request to continue its operations in Nevada while its appeal is being considered, sending the case back to state court. Kalshi had attempted to transfer the case to federal court, but this request was denied.
Legal analysts suggest that this ongoing dispute highlights a larger national debate regarding whether prediction markets should be governed by federal commodities regulations or state gambling laws. Some experts anticipate that the matter may eventually reach the U.S. Supreme Court for a final resolution.
As Daniel Wallach noted on X, 'Unless there is an emergency intervention from SCOTUS, a temporary restraining order from the Nevada state court against Kalshi seems likely.'