Temporary Ban on Kalshi in Nevada Amplifies National Regulatory War Over Prediction Markets
Prediction market platform Kalshi has been hit with an immediate temporary operating ban in Nevada, marking the sharpest escalation yet in the growing nationwide regulatory conflict over event-based prediction trading.
The First Judicial District Court of Nevada issued a 14-day temporary restraining order (TRO) that took effect instantly, barring Kalshi from operating "a derivatives exchange and prediction market which offers event-based contracts relating to sports, elections, and entertainment" without first securing required state gaming licenses.
Shortly after the court ruling, Kalshi alerted Nevada customers on Saturday that it had restricted access to its sports, election, and entertainment markets to comply with the order. The platform continues to offer its crypto, weather, and world news markets to Nevada users, and has called on local customers to lobby policymakers on its behalf. "We disagree with these restrictions, but as a law-abiding company, we’re following them," the company’s customer notice reads. "You can help by contacting your Nevada representatives and telling them you support open access to regulated prediction markets in Nevada."
This marks the first time Kalshi has been forced to partially suspend operations in any U.S. state. Massachusetts regulators previously secured a similar temporary injunction against the firm, but Kalshi was allowed to continue operating in the state while it appeals the ruling. Kalshi declined to comment beyond its public customer notice.
Nevada’s legal battle with Kalshi first launched just over a year ago, when state regulators sent the company a cease-and-desist letter demanding it stop offering sports-related event contracts. That kicked off a tangled back-and-forth that bounced between state and federal court systems. Until the latest TRO, Kalshi was permitted to keep operating in Nevada as its lawyers fought through what the company calls a "jurisdictional quagmire."
After the 14-day TRO expires, the court will review whether to extend the ban for the full duration of the underlying court case. "The expectation here is that the judge will convert the 14 day TRO to a case-long preliminary injunction," says gaming lawyer Daniel Wallach.
The Nevada ruling caps off an especially turbulent few weeks for Kalshi. Earlier this month, Arizona’s attorney general filed criminal charges against the company, accusing it of running an illegal unlicensed gambling operation. Just days before those charges were announced, Kalshi had filed a preemptive lawsuit against Arizona state regulators, challenging any effort to force the firm to comply with state gambling laws.
Dozens of similar legal battles are unfolding across the U.S. over whether prediction markets must abide by state gambling rules, with active cases in Ohio, Tennessee, Massachusetts, and other states.
Many leading prediction market platforms including Kalshi offer sports-related contracts to users over 18 across the country, even in states where sports betting is restricted or banned under local law. The regulatory gap creates irregularities: a 19-year-old in Utah can bet on a soccer match outcome via a prediction market, but cannot do so through a licensed sportsbook, since Utah outlaws all sports betting. Similarly, a 19-year-old in Indiana can place the same wager via a prediction market, even though state law bans anyone under 21 from sports betting. This loophole has drawn fierce anger from a growing bipartisan group of lawmakers.
Kalshi argues its sports event contracts — which let users wager on outcomes like Super Bowl winners or March Madness match results — are not gambling. Instead, the firm classifies them as financial instruments called swaps, regulated at the federal level. So far, the federal government has backed this position. The Commodity Futures Trading Commission (CFTC), the U.S. agency that oversees swaps and derivatives markets, maintains it has exclusive jurisdiction over prediction markets. CFTC head Michael Selig has forcefully rejected claims the industry should be subject to state gambling laws, telling critics he will see them "in court."
The federal government’s stance has not deterred state attorneys general and gaming commissions from continuing their legal challenges, and states have notched several notable wins recently. In January, Nevada blocked another major prediction platform Polymarket from operating in the state, with a temporary restraining order that remains in place through April. The win is limited, however: while Polymarket has a small official U.S. presence, most of its trading volume occurs on its global exchange, which is technically blocked for U.S. users but accessible via virtual private networks (VPNs).
Last week, an Ohio judge ruled against Kalshi after the prediction market filed for a preliminary injunction to block state regulators from pursuing enforcement action for violating state gambling law. In her order denying Kalshi’s motion, U.S. District Court Judge Sarah D. Morrison of the Southern District of Ohio wrote that courts have an obligation to "avoid absurdity."
Rulings on the issue vary widely across states. Just a few weeks before Kalshi’s defeat in Ohio, the platform scored a major victory in Tennessee, when a federal judge blocked state regulators from pursuing action against the large prediction market firm.
The U.S. Supreme Court will likely ultimately have the final say on the legality of these platforms. For now, Kalshi must suspend core operations in Nevada, one of the nation’s largest and most established betting markets. Still, not all recent news is bad for the company: before the Nevada ruling was announced Thursday, Bloomberg reported Kalshi recently raised $1 billion in new funding from investors at a $22 billion valuation — meaning despite all its legal troubles, the company has doubled its valuation since the end of 2025.
Updates:
3/20/26, 12:50 pm PST: This story was updated to include further context about state lawsuits filed against Kalshi.
3/23/26, 11:00 am PST: This story was updated to mention the letter Kalshi sent to Nevada customers on Wednesday.
