Federal Appeals Court Rejects Kalshi’s Bid to Resume Trading in Nevada
A federal appeals court has denied Kalshi, a prediction market operator, the ability to resume trading on sports and election events in Nevada. This decision comes as Kalshi contends with the state’s demand for a gambling license.
The 9th U.S. Circuit Court of Appeals in San Francisco ruled that Kalshi failed to demonstrate that federal commodities trading law overrides Nevada’s state gambling regulations. The court indicated that Nevada, known for its prominent casino industry, likely retains the right to enforce its gambling laws on Kalshi’s sports event contracts.
Nevada’s attorney general’s office hailed the ruling as a “major victory” for the state’s regulatory authority. The office asserted that Kalshi attempted to bypass Nevada’s laws and emphasized, “sports betting does not become something else simply because a company calls it an ‘event contract.’”
The 9th Circuit referred the matter of Kalshi’s election contract trading back to a lower court to address Nevada’s objections.
Currently, about 20 states are engaged in litigation over prediction markets, similar to those operated by Kalshi, Polymarket, and Robin Hood. This ruling increases the possibility that the U.S. Supreme Court may ultimately decide on the issue of state regulation under gambling laws, especially following a contrary decision by the 3rd U.S. Circuit Court of Appeals that New Jersey could not regulate Kalshi.
Kalshi expressed intentions to seek further review of the decision. Meanwhile, its trading on sports, entertainment, and election contracts remains suspended in Nevada.
Kalshi argued that it operates as a “designated contract market” regulated by the federal Commodity Futures Trading Commission (CFTC), not by Nevada’s gaming authorities. The CFTC typically oversees markets involving commodities, futures, and derivatives, including oil futures and agricultural products.
Last year, Nevada’s gaming board issued a cease-and-desist letter to Kalshi, deeming trading on sports events and election outcomes “unlawful in Nevada” and demanding cessation of operations.
Kalshi responded by filing a lawsuit in federal court, which initially resulted in a preliminary injunction against Nevada’s actions. However, this injunction was later lifted, leading Kalshi to appeal.
