Nevada state officials told the Ninth Circuit US Court of Appeals that they plan to file a civil enforcement action against Kalshi in state court, escalating a dispute over the company’s sports event contracts and operations in the state.
Gaming Law and sports betting attorney Daniel Wallach first highlighted the filing, pointing out that state attorneys said Kalshi has continued to expand its business while seeking a stay of enforcement.
In a letter from the Nevada Attorney General’s office, the attorneys pointed to sharply higher trading volumes and what they described as aggressive marketing of Kalshi’s sports-related products as fully legal across all 50 states.
According to the filing, the company has not attempted to “preserve the status quo” during the appeal process.
The state cited prior findings by a federal district court that Kalshi’s ongoing operations in Nevada cause substantial and irreparable harm to state regulators, the gaming industry, and the broader public interest.
Officials argued that each day of continued activity compounds that harm.
Nevada regulators also argued that Kalshi continues to offer sports betting products without complying with the same regulatory framework imposed on licensed sportsbooks in the state.
They said this creates an uneven playing field by allowing Kalshi to operate without adhering to what they described as rigorous oversight requirements that govern traditional operators.
The state maintains that this regulatory dichotomy gives Kalshi a competitive advantage over entities that are fully licensed under Nevada law.
An “existential threat”
State officials characterised Kalshi’s continued presence as an existential threat to Nevada’s gaming industry, which is a central component of the state’s economy and regulatory structure.
Initially, Nevada agreed to temporarily refrain from enforcement action while Kalshi’s motion for a stay was pending.
However, officials told the appellate court that the company’s recent conduct has altered that calculus.
They stated that no court order presently bars the state from pursuing enforcement and that failing to act would effectively grant Kalshi the relief it is seeking, despite the district court’s conclusion that the company is unlikely to prevail on the merits of its claims.
The state further argued that it has a statutory obligation to enforce gaming laws evenly and to protect the public.
In its view, allowing Kalshi to continue operating without intervention would undermine that responsibility and erode the regulatory framework applied to other market participants.
The planned civil enforcement action marks a new phase in the dispute, shifting the conflict into Nevada state court even as related proceedings continue at the federal appellate level.
Attacking from a different angle
Nevada’s decision to launch a civil enforcement action against Kalshi is a calculated manoeuvre designed to neutralise the company’s current tactical advantages.
Wallach explained: “Smart strategic move by Nevada. Otherwise, the 9th Circuit merits panel may have sat on the stay motion until April if not longer, which would have served as a de facto, multi-month stay for Kalshi. The Nevada letter compresses that timeline without offending the 9th Circuit panel.”
By shifting the battle to state court, Nevada is effectively bypassing the federal stalemate that Kalshi has used to maintain its operations.
Kalshi’s primary strategy has been to use the federal appeal process to maintain the status quo. Kalshi’s request to the Ninth Circuit Court to delay enforcement of the law has placed it in a state of legal limbo.
Nevada understood that if it waited for the federal court’s decision, Kalshi could continue business as usual without any consequences.