(AsiaGameHub) - Over the past few days, Kalshi has seen contrasting outcomes in its legal battles against Nevada and New Jersey—cases that rank among the most important in the prediction market space due to their ties to the U.S.’s two largest gaming markets.
Last Friday, Judge Jason Woodbury from Nevada’s First Judicial District Court approved a preliminary injunction in Nevada’s favor against Kalshi. While the details of that injunction are still being finalized, Woodbury chose to extend a temporary restraining order (TRO) that bars Kalshi from offering sports, election, and entertainment event contracts to Nevada users for another 14 days.
Kalshi had to start limiting these contracts on March 20 following the initial TRO, marking the first state-level mandate the platform has adhered to. The new extension will last until April 17, and both parties are set to appear before the 9th Circuit Court of Appeals in San Francisco on April 16. Nevada also has pending cases against Robinhood and Crypto.com that will have hearings on the same day.
Per Reuters, Woodbury didn’t seem swayed by Kalshi’s argument about federal preemption, and he described sports betting and sports contract trading as “indistinguishable.” He concluded that prediction market trading “is a gaming activity that is prohibited” under Nevada state law.
In a statement, Nevada Gaming Control Board Chairman Mike Dreitzer expressed that he was “very pleased” with the decision and pledged to “continue to vigorously enforce Nevada law to protect gaming in our state.” Kalshi provided a comment on the ruling.
New Jersey victory for Kalshi
Shortly after the Nevada setback, though, Kalshi notched a major victory on Monday against New Jersey in the 3rd Circuit Court of Appeals, which is based in Philadelphia.
A three-judge panel voted 2-1 to uphold a lower court’s decision siding with Kalshi, supporting the platform’s claim that it shouldn’t be subject to state gaming rules—only federal derivatives legislation. This was the first of what could be several federal appeals court decisions on prediction markets.
In the majority opinion written by Judge David Porter, the court stated that Kalshi “has met the burden for preliminary injunctive relief” and “has shown a reasonable likelihood of succeeding with its argument that the Commodity Exchange Act (“the Act”) preempts state laws that would otherwise apply.” The panel found that both field preemption and conflict preemption are relevant in this case.
“New Jersey frames the issue broadly (regulating all sports gambling) rather than narrowly (regulating trading on federally designated contract markets),” Porter wrote. “The text of the Act suggests that the narrow framing is the better reading. The Act preempts state laws that directly interfere with swaps traded on DCMs. Kalshi’s sports-related event contracts are swaps traded on a CFTC-licensed DCM, so the CFTC has exclusive jurisdiction.”
Kalshi CEO Tarek Mansour reacted to the ruling, describing it as “a big win for the industry and millions of users” on social media. On the other hand, Judge Jane Roth was straightforward in her dissenting opinion, rejecting Kalshi’s arguments as she found them insincere.
“I see Kalshi’s actions as a performative sleight meant to obscure the reality that Kalshi’s products are sports gambling,” Roth wrote. “Because Kalshi is facilitating gambling, it can be subjected to state regulation.”
Widening legal war for Kalshi, states
These two rulings are the newest developments in an expanding legal conflict involving prediction markets, state governments, and the federal government. The push gained momentum in late 2024, when Kalshi won its case against the Commodity Futures Trading Commission (CFTC) to offer political contracts ahead of that year’s presidential election.
Since then, Kalshi and other platforms have expanded to offer contracts on sports, pop culture, and other topics. This has led to a new surge of lawsuits that keeps growing. Today, nearly every possible legal path related to prediction markets is being pursued, including:
Federal court cases
State court cases
Cases involving tribal entities
Civil cases
Criminal case (Arizona)
Class-action lawsuits
The federal government suing states
This final point is worth highlighting because the CFTC has become more supportive of prediction markets under Chairman Michael Selig. To address the growing number of legal challenges to its authority over these exchange platforms, the CFTC took a proactive step last week by suing Illinois, Connecticut, and Arizona. Rob Schwartz, a former CFTC general counsel, called these lawsuits “absolutely unprecedented” on social media.
“The CFTC will continue to safeguard its exclusive regulatory authority over these markets and defend market participants against overzealous state regulators,” Selig said in a statement.
Under Selig’s leadership, the CFTC announced earlier this month that it has released an advanced notice of proposed rulemaking for prediction markets. The public comment period will end on April 30, and the rulemaking process will proceed after that.
“In particular, the Commission is seeking information and public comment on statutory core principles and Commission regulations that apply to prediction markets, the types of event contracts that may be prohibited as contrary to the public interest, cost-benefit considerations related to prediction markets, and other topics,” the notice reads.
Jess MarquezJess has reported on the global gaming industry since 2022. A Reno, Nevada native, he wants to clarify that the state’s name is pronounced Ne-va-da, not Ne-VAH-da.
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