Nevada Sues Prediction Market Firm Kalshi Over Unlicensed Sports Betting

Federal regulators defend Kalshi's 'event contracts' as state seeks to shut down platform's rapid growth

Published on Feb. 20, 2026

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Nevada gambling regulators have sued the prediction markets company Kalshi, saying the platform's rapid growth in sports-related betting has forced their hand. The state is seeking a court order to stop Kalshi from operating what it sees as an unlicensed sports betting operation. Kalshi has argued that its 'event contracts' are regulated by federal authorities, not the state, and has asked a federal court to take over the new state case.

Why it matters

The legal battle between Nevada and Kalshi highlights the growing tensions between state gambling regulators and the emerging prediction market industry, which has seen explosive growth since the 2024 US presidential election. The outcome could set an important precedent for how these new financial instruments are regulated across the country.

The details

Nevada's Gaming Control Board and state attorney general sued Kalshi in Carson City District Court, shortly after a federal appeals court rejected Kalshi's request to stop the state from taking action. The state claims Kalshi has 'dramatically expanded its business' in sports-related betting, doing 27 times as much business on Super Bowl Sunday this year compared to the year prior, while regulated Nevada gambling operations saw their business shrink. Kalshi has argued that its 'event contracts' are regulated by the federal Commodity Futures Trading Commission, not state gambling laws, and has asked a federal court to take over the new state case.

  • On February 18, 2026, Nevada gambling regulators sued the prediction markets company Kalshi.
  • Earlier in February 2026, a federal appeals court rejected Kalshi's request to stop Nevada from taking action against the company.

The players

Nevada Gaming Control Board

The state agency that regulates the gambling industry in Nevada.

Nevada Attorney General

The chief legal officer of the state of Nevada.

Kalshi

A prediction markets company that the state of Nevada claims is operating an unlicensed sports betting platform.

Commodity Futures Trading Commission (CFTC)

The federal agency that regulates commodity futures and options markets, which Kalshi claims has jurisdiction over its 'event contracts'.

Michael Selig

The chairman of the CFTC, who has defended the authority of prediction market platforms like Kalshi.

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What they’re saying

“Today, the CFTC is taking an important step to ensure that these markets have a place here in America. To those who seek to challenge our authority in this space, let me be clear: we will see you in court.”

— Michael Selig, Chairman, Commodity Futures Trading Commission (thenyledger.com)

“Kalshi has continued to dramatically expand its business, rather than attempting to maintain any kind of status quo.”

— Nevada authorities (thenyledger.com)

What’s next

The legal battle between Nevada and Kalshi is expected to continue, with Kalshi seeking to have the case moved to federal court. The outcome could set an important precedent for how prediction markets are regulated across the country.

The takeaway

The clash between Nevada and Kalshi highlights the growing tensions between state gambling regulators and the emerging prediction market industry, which has seen rapid growth in recent years. The legal battle could have far-reaching implications for how these new financial instruments are regulated nationwide.