Nevada judge halts Kalshi operations over gambling concerns

• Judge Jason Woodbury has issued a temporary restraining order blocking Kalshi from offering event contracts in Nevada for 14 days.
• The legal action follows a lawsuit by the Nevada Gaming Control Board, which argues that the prediction market is operating as an unlicensed sports pool.
• A follow-up hearing to consider a preliminary injunction against the platform is scheduled for April 3.

Court Ruling and Regulatory Action

Carson City District Court Judge Jason Woodbury sided with state regulators on Friday, finding that the Nevada Gaming Control Board is likely to succeed in its claim that Kalshi is violating state gambling laws. The order specifically prevents the company from facilitating contracts related to sports, elections, and entertainment within the state.

Mike Dreitzer, Chair of the Nevada Gaming Control Board, emphasized the state's duty to protect the public from unlicensed gambling. The court's decision arrived shortly after a federal appeals court denied Kalshi’s emergency request to halt state-level proceedings, clearing the way for Nevada to take immediate action.

The Jurisdiction Debate

At the heart of the legal battle is a conflict over which regulatory body has authority over prediction markets. Kalshi has argued that its operations fall under the exclusive jurisdiction of the Commodity Futures Trading Commission (CFTC), a federal agency. However, Judge Woodbury rejected this argument for the time being, stating that the legal authority regarding federal preemption is currently weighted against Kalshi in this specific context.

The judge noted that, based on current evidence, Kalshi's offerings qualify as a "sports pool" under Nevada law. Because the company lacks the necessary state license to operate such a pool, its activities are deemed illegal by state authorities.

Broader Legal Challenges

Nevada is not the only state challenging Kalshi’s business model. The company is currently facing a wave of legal scrutiny across the United States:

• In Arizona, Attorney General Kris Mayes recently filed criminal charges, accusing the company of running an illegal gambling operation—a move CEO Tarek Mansour described as a significant overstep.
• In Massachusetts, a judge previously banned the platform's sports contracts, though that ban was later lifted following an appeal.
• Multiple other states have launched investigations or lawsuits regarding Kalshi’s lack of state-level licensing.

The upcoming hearing on April 3 will determine if the temporary ban in Nevada will be extended into a more permanent preliminary injunction.