The First Judicial District Court in Nevada issued a temporary restraining order on March 20, which stopped Kalshi from offering sports, election, and entertainment-related contracts for 14 days. The order also prohibits Kalshi from allowing its market to accept wagers on those events from persons under the age of 21 in Nevada.
The court will hold another hearing on April 3 at 1:30 p.m. to decide whether to extend the restraining order through a preliminary injunction.
Why Nevada’s Argument Landed
The court did not accept Kalshi’s main argument at this stage in the case. Kalshi has argued that its contracts fall under the framework set by the Commodity Futures Trading Commission and are thus not under state gambling laws. Judge Jason Woodbury had a different opinion for now. In the order, he said that Nevada had a reasonable chance to succeed in the case. According to him, the contracts at issue were close enough to wagering activity under state law to justify intervention.
Nevada didn’t approach the case as a technical debate over terminology. Regulators claimed that by risking money on uncertain sports or elections and the service taking a commission, the activity constitutes a sports pool and a percentage game under Nevada definitions. The court also accepted the state’s argument that permitting an unlicensed service to continue would result in immediate and irreparable harm to Nevada’s regulatory system, including age limits and integrity oversight.
Kalshi’s Position Is Narrowing
Following the ruling, Kalshi has begun to limit certain contracts for Nevada users, allowing them to close positions but not open new positions in the restricted categories. The Nevada Gaming Control Board stated that the court decision resulted in all unlicensed prediction markets known to be operational in Nevada being restricted.
Nevada, however, is not acting in isolation. Massachusetts secured an injunction, though its effect is currently stayed pending appeal. Arizona, on the other hand, has gone further and filed criminal charges.
The larger issue is becoming harder to escape for prediction market operators. Kalshi still has time to argue federal preemption, and the Nevada ruling is only temporary. However, the court has made it clear that state regulators do not have to wait idly by to see how the federal preemption issue plays out. So far, states are testing their powers in court, and some judges are willing to support them.
