Kalshi faces a temporary ban in Nevada amid an ongoing legal dispute

Kalshi is facing mounting legal pressure this week. On Tuesday, Arizona’s attorney general filed a 20-count criminal complaint against the online prediction market, alleging that it is operating an illegal gambling business. Now, Nevada has also taken action, with a judge temporarily blocking the platform from operating in the state as part of an ongoing legal dispute with regulators.

The case in Nevada began in February, when the state, acting through its Gaming Control Board, filed a lawsuit to prevent Kalshi from continuing its local operations. Regulators argue that the company has not obtained the necessary gaming licenses required for the betting activity offered on its platform. They also claim that allowing individuals under 21 to participate violates Nevada law.

Earlier this month, Nevada officials sought a temporary restraining order against the company. On Friday, Judge Jason D. Woodbury approved that request, issuing a temporary ban and setting a hearing for early next month, according to court filings.

In his ruling, Woodbury stated that Kalshi is not licensed under the Nevada Gaming Control Act. He also pointed to the company’s practice of taking a commission on contracts traded through its system, concluding that this activity constitutes a “percentage game,” which Nevada law categorises as gambling.

Kalshi, however, has maintained that it operates under federal oversight. The company argues that because it is registered with the Commodity Futures Trading Commission (CFTC), it falls exclusively under that agency’s jurisdiction and should not be subject to state-level gambling laws. Court documents indicate that this argument remains unresolved, though Woodbury noted that courts have not consistently supported that interpretation so far.

Wired first reported the decision, and  Reuters also noted that Nevada has previously taken similar action against other prediction market platforms, including Coinbase and Polymarket, successfully securing bans against them.

The Nevada case is one of several legal challenges emerging across different states. Regulators are increasingly arguing that prediction market platforms operate in ways that bypass existing gambling laws. At the same time, federal authorities have taken a more supportive stance toward the industry.

Following Arizona’s criminal complaint earlier this week, CFTC chairman Mike Selig publicly criticised the move, calling it a jurisdictional issue rather than a matter for criminal prosecution. He stated that the agency is monitoring the situation closely and considering its next steps. With states pushing for stricter enforcement and federal regulators signalling a more permissive approach, the situation is shaping up to be a broader legal battle over how prediction markets should be regulated in the United States and which level of government has the authority to oversee them.