Kalshi Injunction Might Be Reversed in Nevada Court

A federal judge in Nevada indicated he may reverse the preliminary injunction that has protected Kalshi from state gambling enforcement since April. Bloomberg reported that the court is reviewing whether the platform’s event contracts fall under federal derivatives rules or state gambling authority.

Good to Know

• Kalshi originally won protection from Nevada after challenging the state regulator’s cease-and-desist letter.
• The judge raised doubts about whether certain sports-related contracts qualify as derivatives under federal law.
• Multiple states are running parallel cases that could influence how event contracts are regulated nationwide.

Judge Questions the Derivatives Argument

US District Judge Andrew Gordon signaled during a Friday hearing that he is leaning toward ending the injunction. He plans to issue a written ruling within two weeks. During the hearing, the judge expressed concern about the broad definition of a derivative offered by the company. The judge said:

“It seems like your definition is so broad that pretty much anything can become a swap — anything can have a financial consequence. He also added, “Nobody thought sports bets were commodities or excluded commodities or swaps until some brilliant people at Kalshi.”

The judge questioned whether certain sports-linked markets meet legal standards for swaps or options under federal derivatives law.

How the Dispute Reached Nevada Federal Court

Kalshi sued Nevada regulators in March after receiving a cease-and-desist letter directing the platform to stop offering what the state viewed as unlicensed gambling. The company argues that its contracts fall squarely under the Commodity Futures Trading Commission’s oversight.

In its court filing, Kalshi said:

“Event contracts are a quintessential example of a derivatives contract — they are a type of option.”

The firm maintains that registration with the CFTC places it under federal jurisdiction.

A spokesperson reaffirmed that position after the hearing, saying:

“We are always happy to be heard in court and take the judge’s instruction to confer with the state seriously. In the meantime, we will continue to operate our national exchange in compliance with federal law.”

Multiple States Testing the Same Legal Question

The Nevada case sits within a much larger national pattern. Courts in more than a dozen states are reviewing similar disputes about whether prediction markets fall under gambling statutes or commodities rules.

Recent developments include:

• A California judge rejecting a motion by three tribes seeking to limit Kalshi activity on tribal lands, citing CFTC authority and the Unlawful Internet Gambling Enforcement Act.
• A New Jersey judge granting an injunction that blocks state enforcement while the case moves ahead.
• A Maryland judge denying Kalshi’s request for an injunction.

Several other cases remain active in Massachusetts, New York, and Ohio. Twenty-two Native American tribes, including the Seminole Tribe of Florida, filed a brief supporting Ohio regulators in their effort to restrict event-contract platforms.

Massachusetts Suffolk County Superior Court is expected to hear its injunction request on December 9.

FAQ

Why is Nevada reconsidering the preliminary injunction?

The judge raised concerns about whether some Kalshi contracts meet the legal standard for derivatives, which could shift jurisdiction back to state gambling authorities.

Does Kalshi claim federal oversight covers all its activity?

Yes. The company says its event contracts qualify as derivatives under CFTC supervision.

Are other states involved in similar disputes?

More than a dozen states are reviewing the same issue, with several issuing cease-and-desist letters.

What happens if Nevada dissolves the injunction?

Nevada regulators would gain authority to enforce gambling rules against Kalshi unless another court decision intervenes.