Kalshi Faces Rising Risk in Nevada as Court Ruling Clears Way for Enforcement

Kalshi’s push to secure a nationwide presence is clashing with Nevada’s historic view of gambling regulation. The ongoing legal tension in the state could soon extend beyond civil litigation. After a federal judge refused to give the prediction market a stay, Kalshi is now facing potential enforcement action in the state, including the risk of criminal liability.

Kalshi’s Expansion into Sports Riled State Regulators

The latest ruling dissolved a preliminary injunction that was shielding Kalshi from state regulators. The Nevada Gaming Control Board is now free to act on its prior cease-and-desist order, which accused the company of offering sports products without a state license. According to Nevada law, unlicensed sports betting is a serious offense with steep penalties.

Kalshi’s legal position rests on its federal registration with the Commodity Futures Trading Commission. The company insists that its event contracts are financial instruments, not wagers, and are consequently governed by federal commodities law rather than state gaming regulations. This argument was pivotal to Kalshi’s successful forays into political prediction markets ahead of the presidential election.

However, sports have proven to be a significantly more divisive issue. Many argue that Kalshi, which now offers contracts relating to the NFL, NBA, and college games, looks suspiciously similar to a traditional sportsbook. This pivot has alarmed state regulators, who state that Kalshi’s sports-related offerings directly infringe on local gambling law.

The Platform Faces Rising Pressure

Judge Andrew Gordon’s recent ruling made clear he is unconvinced by Kalshi’s reading of federal law. While Gordon acknowledged that the legal questions are complex, he ultimately concluded that Kalshi was unlikely to prevail. That conclusion was enough to deny a stay, leaving the company exposed while it seeks relief from the Ninth Circuit Court of Appeals.

An appellate ruling could take weeks. Meanwhile, Kalshi faces a difficult choice. It could block access to its services in Nevada, similar to Crypto.com, which lost a similar court fight. Alternatively, Kalshi could continue operating and risk enforcement action such as fines, injunctions, and, in extreme cases, criminal charges.

Kalshi has been vocal against state-by-state shutdowns, arguing that geofencing is costly and potentially inconsistent with CFTC rules. However, other platforms have managed to limit access when necessary, undermining Kalshi’s arguments. Regulators in Ohio, New York, Maryland, and Connecticut have also raised objections to Kalshi’s sports markets, adding to the platform’s legal woes.