Nevada’s gaming regulator has filed a lawsuit seeking to temporarily halt the operations of Kalshi, alleging the platform is offering unlicensed sports wagering within the state. The Nevada Gaming Control Board submitted the request for a temporary restraining order (TRO) on Tuesday, Feb. 17, targeting Kalshi’s “sports event contracts” while the legal merits are debated. At this stage, the board is not pursuing a permanent ban.

Nevada’s complaint asserts that Kalshi’s sports-linked contracts constitute “wagering activity” under state law. Regulators argue that offering such products without a license violates fundamental gaming rules, including strict age verification, which prohibits anyone under 21 from placing bets.

The complaint also emphasizes integrity safeguards required for traditional sports betting, including measures to prevent insider activity and match-fixing. Nevada contends that these protections cannot be bypassed simply because a contract is rebranded as a prediction market product.

Federal Oversight vs. State Authority

The lawsuit follows a series of legal developments. Kalshi had previously benefited from a federal injunction shielding it from Nevada enforcement actions. That protection ended after a judge dissolved the injunction in November, and a federal appeals court declined to pause the ruling.

Kalshi has petitioned to move the case to federal court, arguing that its contracts are technically “swaps”—a form of derivative—under the oversight of the Commodity Futures Trading Commission. If upheld, this claim could limit states’ ability to regulate prediction markets that involve sports outcomes.

Nevada is not acting alone. On Feb. 5, a Massachusetts judge issued an injunction at the request of the state attorney general to block Kalshi from offering sports contracts. While a state appeals court temporarily stayed that order, it reflects increasing scrutiny of prediction markets nationwide. Nevada has previously targeted other platforms, including Coinbase and Polymarket, securing court orders to curb similar activities.

Kalshi cannot bypass Nevada’s strict wagering regulations simply by rebranding sports bets as prediction market contracts.

Legal and Regulatory Implications

The Carson City District Court must now decide whether to grant the TRO. At stake is a broader question about the nature of prediction markets: When a contract tied to a sports outcome is traded digitally, is it a financial instrument under federal law, or does it fall under state-regulated wagering? Nevada’s position is that such contracts constitute wagering, reinforcing the state’s regulatory authority.

The outcome could have far-reaching implications for the emerging prediction market industry, setting a precedent for how states and federal regulators divide oversight over digital event-based trading platforms.