Kalshi has launched a legal battle against Nevada over its event-based contracts. The prediction market platform insists it is not offering traditional sports betting, but instead providing a federally regulated financial product. According to the platform, its contracts fall under the oversight of the Commodity Futures Trading Commission (CFTC), not state-level gaming regulators. Nevada officials disagree. They argue the platform is effectively operating sports pools, which require licensing, inspection, and taxation under state law.
After receiving a cease-and-desist letter from the Nevada Gaming Control Board, Kalshi responded with a lawsuit. The letter demanded the company stop offering contracts tied to sports and elections or face potential penalties. In its legal filing, Kalshi asked the court to declare that only the CFTC has the authority to regulate its business. The case could set a precedent for how prediction markets are treated across the country.
Kalshi Says CFTC Rules, Not States
At the center of Kalshi’s case is the idea that federal law comes first. Kalshi is a federally regulated exchange. That means it reports to the CFTC, not to state gambling boards. Its contracts let people bet on things like interest rate moves, election outcomes, or sports games.
The platform argues its model is different from traditional betting. There’s no “house.” Traders buy and sell positions like they do in stock markets. That makes it a derivatives market, not a sportsbook. Kalshi says state interference disrupts the national framework Congress created for futures trading.
Trump Jr, CFTC, and a Growing Industry
Donald Trump Jr. backs Kalshi, and the platform has gained traction fast. After the Super Bowl, the platform and Crypto.com came under fire for offering sports-related contracts. The CFTC investigated but found no violations. That was a big win for Kalshi.
CFTC Acting Chair Caroline Pham has said the agency is shifting its focus. It wants to stop fraud—not innovation. That message gave hope to platforms like Kalshi. Still, the agency is reviewing event contracts more closely and plans to hold public talks soon.
New Jersey Joins the Fight Against Kalshi
New Jersey didn’t stay on the sidelines. Its Division of Gaming Enforcement also sent the platform a cease-and-desist order. Like Nevada, New Jersey sees Kalshi’s contracts as unauthorized gambling. Kalshi responded with another lawsuit.
The company argues that state rules don’t apply because it’s under CFTC control. Its legal team says New Jersey’s order fails to recognize how Kalshi works. They stress that it’s a peer-to-peer market, not a betting shop. The platform wants the courts to draw a clear line between financial markets and gambling regulation.
What’s Next for Kalshi—and the States?
This legal battle is about more than Kalshi. If the courts side with the company, it could reshape how event contracts are regulated in the U.S. Other platforms like Crypto.com and even unregulated markets such as Polymarket are watching closely.
The outcome could affect how states like Nevada and New Jersey deal with federally regulated platforms. It might also decide how much control states have over new types of betting and trading. For now, Kalshi is fighting hard to stay in the game—and to prove that its model is about markets, not gambling. A hearing in Nevada is expected no later than April 2.