Nevada Battles Prediction Markets Over 'Unlicensed Sports Gambling'

State's legal action against Kalshi moves to federal court, raising questions about the future of the industry.

Published on Mar. 2, 2026

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Nevada's efforts to block the prediction market platform Kalshi are moving through multiple courts, with the state claiming Kalshi's prediction market contracts are offering illegal sports betting. Kalshi argues it is a financial exchange, not a sportsbook. The case has been moved to federal court, where the battle over whether prediction markets are regulated financial exchanges or unregulated sportsbooks could have major implications for the industry nationwide.

Why it matters

The outcome of this case could set a precedent for how other states approach prediction markets, which have exploded in popularity in recent years. Nevada, long the center of legal sports betting in the U.S., is taking an aggressive stance, leading a coalition of states arguing they should be able to regulate prediction markets as gambling companies.

The details

Nevada regulators claim that Kalshi, through its prediction market contracts, is offering people a way to illegally bet on sports. Kalshi argues it is merely a financial exchange. The case was initially in state court, but Kalshi has now moved it to federal court, where it will be heard by U.S. District Judge Miranda Du in the District of Nevada. Legal experts say the question could ultimately be decided by the Supreme Court.

  • On Tuesday, the Ninth Circuit Court of Appeals denied Kalshi's request to block Nevada from taking civil action against the platform.
  • Just days later, Kalshi responded by filing a petition for removal to transfer the Nevada matter to federal court.

The players

Kalshi

A prediction market platform that is fighting Nevada's efforts to block it from operating in the state, arguing it is a financial exchange not a sportsbook.

Nevada Gaming Control Board

The state regulatory body that claims Kalshi's prediction market contracts are offering illegal sports betting, and is taking legal action to stop the platform from operating in Nevada.

Commodity Futures Trading Commission (CFTC)

The federal agency that oversees prediction market platforms like Kalshi and Polymarket, and maintains that they are not gambling.

Michael Selig

The CFTC chairman who filed a 'friend-of-the-court' brief rebuking Nevada's enforcement efforts against prediction markets.

I. Nelson Rose

A specialist in gaming regulations and law professor emeritus at Whittier College in California, who believes the courtroom action could last for years.

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What they’re saying

“It's our view that this is sports betting, plain and simple. Money is risk-based upon the outcome of sporting events and that is sports betting (not made under the umbrella state regulations) and that's illegal under Nevada law.”

— Mike Dreitzer, Chairman, Nevada Gaming Control Board (NBC News)

“CFTC-registered exchanges have faced an onslaught of lawsuits seeking to limit Americans' access to event contracts and undermine the CFTC's sole regulatory jurisdiction over prediction markets. This power grab ignores the law and decades of precedent.”

— Michael Selig, Chairman, Commodity Futures Trading Commission (NBC News)

“Everybody looks at Nevada as being the leading jurisdiction in the United States when it comes to how we are going to treat gambling. I've always viewed this as eventually going to the Supreme Court. It's just a matter of when.”

— I. Nelson Rose, Gaming Regulations Specialist and Law Professor Emeritus, Whittier College (NBC News)

What’s next

The case will now be heard by U.S. District Judge Miranda Du in the District of Nevada, after Kalshi moved it from state to federal court. Legal experts say the battle could last for years and ultimately end up before the Supreme Court.

The takeaway

This legal battle over whether prediction markets are regulated financial exchanges or unregulated sportsbooks will have major implications for the future of the rapidly growing industry. Nevada's aggressive stance, as the longtime center of legal sports betting in the U.S., could set a precedent for how other states approach these emerging platforms.