A Nevada federal judge has revoked Kalshi’s injunction and ordered the prediction-market operator to cease its sports event contracts in the state, determining that its markets are categorized as sports betting and subject to state gaming authority rather than federal derivatives oversight. The ruling, issued on Nov. 24 by Judge Andrew Gordon, concludes the temporary protection Kalshi obtained in April and permits Nevada regulators to enforce a cease-and-desist order.
Kalshi intends to appeal, having filed an emergency motion for a stay on Nov. 25.
In April, Kalshi was granted a temporary restraining order allowing it to maintain sports-themed contracts active in Nevada while contesting a cease-and-desist from the Nevada Gaming Control Board (NGCB). On Monday, Gordon reversed the decision, agreeing with the NGCB and ruling that Kalshi’s Super Bowl, March Madness, and prop-style markets align with conventional sports wagering, not swaps under the Commodity Exchange Act.
Gordon stated that Kalshi’s products are “sports wagers, and anyone who sees them knows it,” highlighting that the company previously marketed itself as the first app offering legal sports betting nationwide without holding state gaming licenses.
Several developments since the spring swayed the court’s stance:
– A Maryland court rejected Kalshi’s request for an injunction over similar contracts, reinforcing state authority on sports wagering.
– Gordon previously denied Crypto.com an injunction in October, finding sports contracts are not swaps under the CEA. Crypto.com subsequently withdrew sports markets in Nevada.
– Kalshi expanded its sports offerings, including prop-style markets, which the court perceived as lacking real-world economic purpose, opposing earlier company arguments.
The judge noted that new facts, along with evolving case law, tipped the balance of harms in favor of Nevada regulators and the public interest.
Kalshi claimed that geofencing Nevada would cause financial and reputational harm. Gordon disagreed, citing Crypto.com’s compliant exit and indicating the risk of harm to Nevada’s regulated wagering industry outweighed Kalshi’s business concerns. “Kalshi could have proceeded cautiously, but instead it greatly expanded its offerings,” Gordon wrote, acknowledging that the company contributed to its own legal risk.
Kalshi filed an emergency motion for a stay pending appeal, cautioning about potential criminal enforcement if it continues operating sports contracts in Nevada. The case advances to the appeal stage, with the CFTC having already directed designated contract markets to prepare contingency plans for state-level shutdowns.
For bettors and regulators, this ruling underlines a critical boundary: sports prediction contracts remain gambling products under state jurisdiction, not commodities markets governed federally.
Key implications moving forward:
– Operators offering sports-based event contracts face increased regulatory risk.
– The ruling reinforces state oversight precedent, limiting federal venue-shopping.
– Exchanges might need to geofence markets or concentrate on political/economic contracts instead of props and outcomes related to games.
This case resides at the intersection of sports betting, derivatives trading, and prediction markets—a domain drawing significant interest from financial exchanges and sportsbooks as U.S. wagering develops into a $100 billion-plus handle industry. If Kalshi ultimately loses on appeal, it could affirm state supremacy over sports-related markets nationwide, potentially hindering the expansion of federally regulated event-contract trading.
Kalshi maintains that its contracts fall under CFTC authority and plans to continue its legal battle.
- SCCG Management. The Gambling Industry’s Global Connector. Access Here.
- Source: SCCGManagement.com