Nevada court issues temporary halt on Kalshi's state operations
Local regulators in Nevada have secured a court order blocking Kalshi from offering contracts related to sports, political elections, and entertainment events for a two-week period.
State authorities in Nevada have secured a temporary prohibition against Kalshi's operations within their jurisdiction, with a judge determining that regulators have a reasonable probability of success in their case arguing the platform's event contracts breach Nevada's gaming statutes.
On Friday, Judge Jason Woodbury of the Carson City District Court granted a temporary restraining order, supporting the Nevada Gaming Control Board's petition to halt Kalshi's activities in the state for a period of 14 days.
"Prediction markets, to the extent they facilitate unlicensed gambling, are illegal in Nevada, and we have a statutory duty to protect the public," Nevada Gaming Control Board Chair Mike Dreitzer said in a statement to Reuters.
A spokesperson for Kalshi had not provided a response to requests for comment at the time of publication.
The judge's ruling follows a Thursday decision by a federal appeals court that rejected Kalshi's emergency petition to halt federal court proceedings, thereby enabling Nevada authorities to move forward with enforcement actions.
Nevada bars sports, election and entertainment event contracts
Judge Woodbury specified in his ruling that Kalshi is prohibited from providing event contracts tied to sports, elections, and entertainment within Nevada's borders.
The judge further noted that, based on the evidence presented in the preliminary stages of litigation, these types of contracts qualify as a "sports pool" according to Nevada statutes, an activity for which Kalshi lacks the required licensing.
Last month, the Nevada Gaming Control Board initiated legal proceedings against Kalshi, claiming the company must obtain state licensing before it can lawfully provide sports event contracts to residents.
In its defense, Kalshi maintained that its contract offerings fall under the sole regulatory authority of the Commodity Futures Trading Commission, a federal agency that has supported prediction markets currently defending themselves in various state courts against allegations of providing unlawful gambling services.
"The question of federal preemption in this regard is nuanced and rapidly evolving," Judge Woodbury wrote in his motion, rejecting Kalshi's argument. "At the moment, the balance of convincing legal authority weighs against federal preemption in this context."
The judge has set April 3 as the date for a hearing to evaluate a motion seeking a preliminary injunction against Kalshi's operations.
The prediction market platform currently faces lawsuits from several states alleging unlicensed operations, while Kalshi has also initiated its own legal challenges in response to these accusations.
Earlier this year, a state judge in Massachusetts issued a ban preventing Kalshi from offering sports event contracts, though this prohibition was subsequently suspended following an appeal filed by the company.
This past Tuesday, Arizona's legal authorities brought criminal charges against Kalshi, with Attorney General Kris Mayes asserting that the platform is "running an illegal gambling operation," accusations that Kalshi CEO Tarek Mansour characterized as a "total overstep."