Nevada gaming regulators filed a lawsuit Tuesday to prevent prediction market company Kalshi from allowing residents to place bets on football and basketball games. The legal action is part of a growing nationwide dispute over which agencies have authority to regulate online betting platforms.
Gaming officials in Nevada launched legal action Tuesday aimed at stopping prediction market company Kalshi from allowing state residents to place wagers on football and basketball contests through sports betting contracts.
The Nevada Gaming Control Board’s lawsuit represents part of a growing nationwide dispute over which regulatory agencies have the authority to oversee companies like Kalshi that enable users to make financial wagers through online prediction platforms.
The timing of Nevada’s legal filing coincided with the Commodity Futures Trading Commission filing a brief in separate court proceedings, where the federal agency argued it maintains exclusive authority over prediction market operations, backing companies like Kalshi.
For several months, Kalshi had worked to stop Nevada regulators from bringing legal action against the company. However, a federal appeals court on Tuesday refused to maintain a lower court judge’s November decision that had previously blocked Nevada officials from pursuing enforcement measures.
If Nevada wins its case, the state would join Massachusetts as the second jurisdiction to obtain a court ruling preventing Kalshi from providing sports betting contracts. A Massachusetts judge issued such an order February 5 following a request from that state’s attorney general.
While the Massachusetts injunction was scheduled to become effective within 30 days, a state appeals court judge on Tuesday suspended its implementation while Kalshi pursues an appeal.
In Tuesday’s court filing, Nevada argues that providing sports betting contracts, along with certain other event contracts, amounts to gambling activity under state law, requiring Kalshi to obtain proper licensing.
State officials claim Kalshi has failed to follow Nevada gaming rules, including regulations that prohibit anyone younger than 21 from placing bets and require companies accepting sports wagers to implement protections against betting by insiders such as athletes and match manipulation.
Nevada has already secured court orders preventing two other prediction market companies, Coinbase and Polymarket, from providing event contracts to state residents.
While Nevada seeks a temporary restraining order against Kalshi from a state court judge, the company responded to Tuesday’s lawsuit by requesting transfer to federal court, claiming the case involves federal law questions about whether it falls under CFTC exclusive jurisdiction.
The New York-headquartered company maintains that the federal regulator holds sole authority over its event contracts because they function as swaps, which are a category of derivative financial instruments.