Nevada gaming regulators filed a lawsuit to block prediction market operator Kalshi from offering event contracts that would allow its residents to bet on sports.
While Nevada allows for sports betting, the state maintains a strict regulatory framework, and regulators argue that any platform doing wagers on sports events must possess a state gaming license to ensure consumer protections, age restrictions, and the integrity of the games.
For the New York-based platform, these sports-related contracts are marketed as financial derivatives or prediction markets rather than traditional bets. However, the Nevada Gaming Control Board (NGCB) described the platform’s operations as a threat to the state’s licensed gaming industry, noting that Kalshi’s business volume surged 27 times on Super Bowl Sunday compared to the previous year.
Nevada’s gaming regulators crack down on prediction market platforms
This move follows similar lawsuits against Coinbase and a successful temporary restraining order against Polymarket, as state regulators argue that allowing residents to stake money on sports outcomes constitutes illegal gambling without a state-issued license.
While platforms like Kalshi and Coinbase maintain that their “event contracts” are federally regulated financial swaps regulated by the Commodity Futures Trading Commission (CFTC), a recent take by the Trump administration, Nevada officials contend these markets bypass critical safeguards such as age restrictions and insider trading protections.
The legal battle has now reached a boiling point in both state and federal courts, with Nevada viewing the 27-fold surge in prediction market activity during the recent Super Bowl as an “existential threat” to its strictly regulated, multi-billion dollar gaming industry.
A broader battle over federal vs. state power
The lawsuit follows a recent federal appeals court ruling that cleared the way for Nevada to proceed with enforcement. Kalshi, which is regulated by the Commodity Futures Trading Commission (CFTC), argues that federal law should have exclusive jurisdiction over its markets.
On the same day the suit was filed, the CFTC submitted a brief supporting companies like Kalshi, asserting that these contracts are “swaps” squarely within its federal remit. This legal move is part of a wider trend in the Silver State, where Nevada has recently secured orders to block other prediction market operators like Coinbase and Polymarket for similar unlicensed activities.
