The Nevada Gaming Control Board is preparing to launch civil enforcement proceedings against prediction market operator Kalshi after informing the Ninth Circuit Court of Appeals of its intentions. The move represents the latest escalation in an ongoing legal battle over state versus federal gambling jurisdiction.
Nevada Chief Deputy Solicitor General Jessica Whalan submitted a letter stating that “Kalshi’s own actions now compel State Defendants to take action to stop Kalshi’s unlawful behavior.” The state argues that failing to enforce Nevada law would effectively grant Kalshi protection despite findings that the company causes irreparable harm to Nevada’s regulated gaming market.
The legal confrontation began last March when Nevada issued a cease-and-desist letter accusing Kalshi of violating state gambling laws. Kalshi responded with a federal lawsuit, initially securing an injunction preventing state enforcement action.
That protection expired in January when U.S. District Judge Andrew Gordon lifted the injunction, ruling that Kalshi had not demonstrated likelihood of success in its argument that federal commodities law preempts state gaming regulations. The decision undermined a core assumption of prediction market business models—that federal oversight automatically shields operators from state gambling laws.
Kalshi has appealed to the Ninth Circuit while continuing to expand operations and promote its product as legal nationwide. Nevada contends this expansion during the appeal process necessitates immediate enforcement action to apply gaming laws “evenhandedly.”
The case has implications extending far beyond Nevada, as prediction markets increasingly conflict with state gaming regulators who assert jurisdiction over sports-event contracts. Several states have challenged the legal theory that federal commodity regulations supersede traditional gambling enforcement.
Nevada’s aggressive posture signals that state regulators are willing to test these jurisdictional boundaries through direct enforcement actions, potentially establishing precedent for how prediction markets operate within regulated gambling jurisdictions.
