A Nevada judge has temporarily banned Kalshi from operating in the state, deepening a legal crisis that now spans two states and threatens the prediction market’s ability to function across the country.
Judge Jason D. Woodbury granted the temporary restraining order Friday, finding that Kalshi operates a “percentage game” under Nevada law — a category the state defines as gambling — because the platform takes a commission on contracts traded through its system. Woodbury also noted the company is not licensed under the Nevada Gaming Control Act and that its policy of allowing users under 21 violates state law. A hearing on the restraining order is scheduled for early next month, according to court documents.
The ruling came days after Arizona‘s attorney general filed a 20-count criminal complaint against the company, accusing it of running an illegal gambling operation. The back-to-back blows mark one of the most difficult stretches since the platform launched.
Nevada’s Gaming Control Board originally sued Kalshi in February. The state had previously won similar bans against prediction market competitors Coinbase and Polymarket, according to reports.
Kalshi’s central defense — that its registration with the Commodity Futures Trading Commission places it exclusively under federal regulatory authority and shields it from state law — has not found traction. Woodbury acknowledged the federal preemption question remains legally unsettled but noted the courts have not been leaning toward Kalshi’s position. The company declined to comment.
Federal Officials Push Back on State Actions
While states escalate enforcement, federal regulators are moving in the opposite direction. Following Arizona’s criminal filing, CFTC Chairman Brian Quintenz — identified in the announcement as Mike Selig — posted publicly that the charges represented “a jurisdictional dispute and entirely inappropriate as a criminal prosecution,” adding that the agency is “watching this closely and evaluating its options.”
That puts the federal government and multiple state governments on a direct collision course over who controls prediction markets — a fight neither side appears ready to walk away from.
A Growing Map of State Challenges
Nevada and Arizona are not outliers. A widening group of states has moved to argue that platforms like Kalshi and Polymarket are illegal gambling operations operating outside state licensing frameworks. The CFTC’s visible willingness to defend its registered exchanges against state prosecution all but ensures the conflict escalates to a higher legal arena before any resolution is reached.
Kalshi’s user base, its contract market model, and its federal registration have made it the central test case for a question no court has definitively answered: when a federally registered derivatives exchange lets ordinary users bet on event outcomes, does state gambling law apply at all.
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