A Nevada district court judge has temporarily banned Kalshi from providing certain prediction markets in the state.
The ruling prohibits prediction markets relating to sports, politics, and entertainment while litigation is pending.
The ruling was made on Friday (20 March), following the Nevada Gaming Control Board filing a complaint against Kalshi last month seeking a temporary restraining order (TRO).
At issue is how Kalshi’s model should be classified. The company positions itself as a derivatives exchange where users trade contracts based on real-world outcomes, framing the activity as financial risk management rather than gambling.
However, Nevada regulators take issue with that characterisation, arguing that those contractual arrangements related to sporting events or elections are essentially similar to betting and thus included in Nevada’s definition of a sports pool.
Carson City District Court Judge Jason Woodbury, who issued the TRO, determined that certain offerings align closely enough with traditional wagering to justify state oversight, despite Kalshi’s federal registration.
Kalshi has maintained that regulation by the Commodity Futures Trading Commission limits state authority. The company has pointed to growing federal acceptance of prediction markets as part of a broader financial ecosystem.
That position has faced increasing resistance at the state level. Massachusetts previously secured an injunction targeting similar contracts, though enforcement remains paused pending appeal.
Meanwhile, Arizona has taken a more aggressive route, as state authorities recently filed criminal charges alleging the company operated in the state without proper authorisation.
Kalshi begrudgingly gives in
Following the Nevada order, Kalshi’s platform appeared to remain active for local users on Saturday. Gaming attorney and analyst Daniel Wallach reported that restricted contracts were still accessible shortly after the ruling.
By Sunday, however, the company adjusted its platform to comply. Nevada users can exit existing positions but cannot initiate new trades involving the restricted categories.
It told customers via email: “This situation is unprecedented – Nevada is currently the only state with temporary restrictions in effect due to a court order.
“We disagree with those restrictions, but as a law-abiding company, we’re following them. We’re confident in our legal position, and we’ll continue to fight for your right to trade the same products that are available in 49 other states.”
A hearing scheduled for 3 April will determine whether a longer-term injunction is warranted. That decision could extend the current restrictions throughout the duration of the case.
The dispute highlights a growing conundrum between federal financial regulation and state gambling laws.
The eventual outcome in Nevada may influence how other jurisdictions approach the oversight of event-based trading platforms.