Nevada Judge Clears Path for Action Against Prediction Markets

A federal court in Nevada has given state regulators a significant opening in their efforts to curb prediction market platforms that operate within its borders. 

Nevada Judge Sends Kalshi, Polymarket Cases Back to State Court

In twin rulings issued Monday, the US District Court for the District of Nevada determined that disputes involving Kalshi and Polymarket’s parent company Blockratize should proceed in state court rather than at the federal level.

The decisions mean the Nevada Gaming Control Board can continue its pursuit of civil enforcement actions against both companies before a state judge. Regulators are expected to seek temporary restraining orders that could suspend the firms’ event-based contracts for Nevada residents while the cases move forward, as reported by Decrypt.

At the center of the dispute is whether federal commodities law overrides state gambling regulations. Kalshi and Polymarket have argued that their event contracts fall under the exclusive authority of the Commodity Futures Trading Commission (CFTC) through the Commodity Exchange Act (CEA). They have maintained that this federal framework leaves no room to intervene at the state level.

The court concluded that Nevada’s claims are grounded in state law and that federal commodities statutes do not displace state authority in this context. As a result, the judge found that the federal court lacked jurisdiction to hear the cases and ordered them returned to state court.

Geofencing Threat Looms After Nevada Court Setback

Legal observers say the outcome increases the risk that Kalshi could be forced to halt operations in Nevada at least. Attorney Daniel Wallach, who first highlighted the rulings, indicated that the remand places Kalshi closer to a potential shutdown in the state. He also suggested that if one state compels geofencing or other restrictions, it may weaken the company’s arguments elsewhere.

Polymarket faces similar challenges. The court rejected its attempt to characterize itself as acting under federal authority in a way that would justify keeping the dispute in federal court. After the ruling, Blockratize filed an emergency motion seeking a short-term administrative pause of the remand order while it prepares an appeal.

The clash in Nevada is unfolding amid rapid growth in the prediction market sector, which has seen trading volumes surge over the past year. At the same time, platforms have come under scrutiny from multiple states over whether contracts tied to sports or political outcomes amount to unlicensed gambling.With conflicting court outcomes emerging across different jurisdictions, the broader question of federal versus state oversight may require higher court review. For now, Nevada regulators appear poised to press their case in state court, making it the first state where a prediction market is sidelined by judicial action.