Nevada Judge Extends Ban on Kalshi, Ruling Event Contracts Are Illegal Gambling
A Nevada judge has extended a court order blocking Kalshi from operating in the state, delivering a significant legal defeat to the prediction market platform. Judge Jason Woodbury ruled from the bench in Carson City on Friday, granting a preliminary injunction sought by the Nevada Gaming Control Board. The decision transforms a temporary restraining order from March 20 into a longer-term ban, which will remain in effect while the court determines a final resolution, reportedly through at least April 17.
The core of the ruling hinges on a fundamental regulatory classification. Judge Woodbury explicitly rejected Kalshi’s central argument that its event-based contracts—allowing users to trade on outcomes of sports, elections, and entertainment—are financial derivatives, or “swaps,” under the sole jurisdiction of the federal Commodity Futures Trading Commission (CFTC). Instead, the judge found the company’s activities constitute unlicensed gambling under Nevada state law.
Judge Draws Direct Parallel to Sports Betting
In his reasoning, Judge Woodbury stated there is no meaningful distinction between placing a traditional wager with a licensed Nevada sportsbook and purchasing a Kalshi contract tied to the same game’s outcome. “No matter how you slice it, that conduct is indistinguishable,” the judge reportedly said, as quoted by Reuters. He concluded that such activity clearly qualifies as “gaming” under Nevada’s broad statutory definition and therefore requires a state gaming license, which Kalshi does not possess.
Kalshi notional volume. Source: Kalshi
This enforcement action marks the first instance of a state securing a currently active, court-enforced ban against Kalshi. The company, headquartered in New York, has faced a growing wave of state-level resistance. Just last month, Utah lawmakers passed legislation specifically classifying proposition-style bets on in-game events as gambling, a move widely seen as targeting platforms like Kalshi and Polymarket. Separately, Kalshi’s CEO has publicly fired back against criminal charges filed in Arizona, calling them a “total overstep.”
Federal Regulator Vows to Defend Its Authority
The legal clash highlights a fierce jurisdictional battle between state gaming regulators and the federal CFTC. The CFTC has consistently asserted that prediction markets operating on economic or event outcomes fall under its purview as swaps markets. CFTC Chairman Michael Selig has been vocal on this front, stating the agency is prepared to litigate to protect its oversight.
Speaking at an industry conference last month, Chairman Selig framed prediction markets as potential “truth machines,” arguing that when participants risk capital on their beliefs, these markets can generate more transparent and efficient signals about future events than traditional opinion polling. This philosophical stance underpins the CFTC’s regulatory approach, which contrasts sharply with Nevada’s characterization of the same activity as gambling.
The Nevada case sets a critical precedent as U.S. regulators and lawmakers grapple with how to classify and oversee the rapidly evolving prediction market sector. With states like Nevada and Utah moving to enforce their gambling laws and the CFTC preparing to defend its federal mandate, the industry faces a fragmented and contentious regulatory landscape. The outcome of this specific lawsuit, and others like it, will determine whether platforms like Kalshi operate under the CFTC’s framework or are forced to navigate the costly licensing regimes of individual states.
