Court Ruling Raises Risk of Nevada Trading Halt for Kalshi, Polymarket
A federal judge has returned Nevada’s case against prediction market Kalshi to state court, allowing the Nevada Gaming Control Board to pursue an injunction that could bar Kalshi from offering event contracts in the state. The decision found Nevada’s claims arise under state law and are not completely preempted by federal law. This counters Kalshi’s argument that the Commodity and Futures Trading Commission (CFTC) has exclusive jurisdiction over its operations. If Nevada wins an injunction, Kalshi will be forced to geofence its services, potentially weakening its position in similar disputes with other states. The court issued a similar remand in a separate case involving Polymarket. Kalshi may seek emergency relief from higher courts, but the remand is a significant setback and could set a precedent for other states to take similar action. States retain authority to regulate gambling regardless of federal derivatives law, meaning prediction market operators face possible state-by-state restrictions, which could fragment market liquidity. The escalation of state versus federal oversight may ultimately require resolution by the U.S. Supreme Court.
