Nevada court temporarily blocks Kalshi amid dispute over legality of prediction market contracts

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Kalshi blocked in Nevada case

Court sides with regulator

Carson City District Court Judge Jason Woodbury issued a temporary restraining order blocking Kalshi from operating in the state for 14 days. He supported the position of the Nevada Gaming Control Board, which insists that the company must obtain a local license.

Regulator chair Mike Dreitzer stated that “prediction markets, to the extent they facilitate unlicensed gambling, are illegal in Nevada, and we have a statutory duty to protect the public.”

The court also noted that contracts related to sports, elections, and entertainment events could be classified as a “sports pool” under state law. Kalshi does not hold the required license.

An attempt to halt the proceedings through a federal court failed: the appeal was denied, giving local regulators grounds to take action.

Jurisdiction dispute and state pressure

Kalshi argues that its activities fall under federal oversight — specifically the U.S. Commodity Futures Trading Commission (CFTC). This remains the company’s central argument in disputes with regulators.

However, the Nevada court took a more cautious view. According to Woodbury, “the question of federal preemption in this regard is nuanced and rapidly evolving,” and at this stage there is insufficient basis to conclude that federal rules override state requirements.

Kalshi’s challenges extend beyond Nevada. Similar restrictions have been imposed in Massachusetts, while Arizona has filed criminal charges. State Attorney General Kris Mayes said the company is “running an illegal gambling operation,” while Kalshi CEO Tarek Mansour called it a “total overstep.”

What it means for prediction markets

The situation around Kalshi highlights how uncertain the regulatory treatment of prediction markets remains. While formally closer to derivatives, in practice they often resemble event-based betting — raising concerns among regulators.

Interest in such products continues to grow: they are used not only by traders but also by analysts assessing probabilities of political and economic outcomes. At the same time, the lack of unified rules creates fragmentation, as each state may interpret these instruments differently.

For companies, this translates into elevated legal risk. Even with federal backing, launching such products does not guarantee protection at the state level. As a result, the market may develop unevenly, with varying rules across jurisdictions.

Against this backdrop, investor interest remains strong. Kalshi recently raised over $1 billion in a new funding round, reaching a valuation of about $22 billion — nearly doubling since November. The round was led by Coatue Management, underscoring continued capital interest in the sector despite increasing regulatory pressure.

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