Nevada Judge Deals Blow To Kalshi’s Legal Standing

Prediction market Kalshi took a blow to its efforts to continue operations in Nevada this week.

A Ninth Circuit judge denied Kalshi’s emergency motion for an administrative stay in Nevada. The bright side for Kalshi is that its main motion for a stay is still pending.

BREAKING: Ninth Circuit denies Kalshi’s emergency motion for administrative stay, which now opens the door to Nevada filing an immediate civil enforcement action (today) against Kalshi in state court, with TRO issuance expected within a few days. pic.twitter.com/XSfcR8cPv2

— Daniel Wallach (@WALLACHLEGAL) February 17, 2026

Nevada didn’t wait long, however, and filed a complaint and a temporary restraining order against Kalshi in state court. Kalshi, which seems to want these battles to take place in federal court, immediately filed a notice for removal of that lawsuit.

There will now be a brief pause as officials decide where the case will take place. The upside for Kalshi is that it will give the Ninth Circuit more time to rule on its request for a stay.

The complex legal dispute between Kalshi and Nevada regulators centers on a fundamental jurisdictional disagreement. Kalshi asserts that its CFTC license makes it immune to state law. Thus, Kalshi’s legal team is pushing for federal judges to hear the case. Nevada, however, is advocating for the cases to remain in state courts.

It’s a nearly identical legal battle the company is having in other states. First, a Maryland judge ruled against Kalshi last August. But state regulators agreed to let Kalshi continue operations in the state until the fight is over. Before Nevada, Massachusetts was the latest jurisdiction to rule against the platform.

Silver State Maintains Kalshi Is “Unlicensed Gambling”

Nevada is home to one of the most robust gambling markets in the US, especially when it comes to brick-and-mortar casinos, so it’s not exactly surprising that it’s balking at the prospect of Kalshi offering gambling-like contracts, unfettered by state interference.

The newest 19-page application for a temporary restraining order that Nevada has submitted to the court points to a variety of alleged offenses, including the following:

• Unlicensed gambling: Nevada argues that Kalshi’s event-based contracts are simply another way of wagering.
• Underage betting: Kalshi accepts 18+, while casinos and online sports betting companies require 21+.
• Tax evasion and unfair competition: Kalshi is not a licensed gaming entity, so it doesn’t contribute tax revenue to Nevada. That also gives it a leg up on regulated sportsbooks that must pay taxes and other licensing fees.
• Lack of oversight: Kalshi is not subject to Nevada’s strict gambling laws, and the risk of market manipulation is high.

While users on Kalshi can bet on anything (in fact, that’s one of the company’s slogans), the vast majority of volume occurs on sports. Roughly 90% of Kalshi’s trading volume is sports-related.

One major problem for state regulators? The Trump administration is heavily in favor of prediction markets. Earlier this week, newly appointed CFTC chairman Michael Selig penned an opinion piece titled “States Encroach on Prediction Markets” in The Wall Street Journal, where he voiced his support for sites like Kalshi and Polymarket:

“The CFTC will no longer sit idly by while overzealous state governments undermine the agency’s exclusive jurisdiction over these markets by seeking to establish statewide prohibitions on these exciting products.”

To that end, the CFTC filed an amicus brief in support of prediction markets in Nevada on Wednesday.

Kalshi’s $1B Super Bowl Showcases Competitive Advantage

Nevada makes the point time and again that Kalshi operates like a sportsbook, but without any of the downsides (taxes, regulations, and player protection).

That advantage appears to be paying dividends as Nevada pointed to its strong performance over the last six months on Page 10 of its restraining order application:

“KALSHI reported over $1 billion in wagers on Super Bowl Sunday alone—over 27 times more than it reported for the Super Bowl in 2025. In contrast, betting volumes on the Super Bowl at Nevada’s regulated sportsbooks declined nearly 15% from 2025, hitting a ten-year low. So KALSHI has massively expanded its unlicensed gambling business, to the detriment of competitors that are licensed in Nevada.”

The state has already succeeded in getting prediction market competitors Crypto.com, Coinbase, and Polymarket to pause their services in Nevada, but Kalshi remains the lone standout.

Now, both Kalshi and Nevada regulators will have to wait and see if Kalshi gets its request for a stay in the Ninth Circuit.

Here’s a timeline of the ongoing battle between Kalshi and the state of Nevada: