U.S. District Judge Miranda M. Du on Monday remanded Nevada’s enforcement case against prediction market operator Kalshi back to state court, a procedural move that increases the platform’s exposure to a near-term temporary restraining order.
The ruling found that the Nevada Gaming Control Board’s (NGCB) claims arise under state law, not the Commodity Exchange Act (CEA). The court rejected Kalshi’s argument that the CEA “completely displaces” state authority, pointing to a savings clause that preserves state court jurisdiction over gambling-related claims.
The immediate consequence is speed. In state court, the NGCB can pursue injunctive relief on a faster calendar, potentially forcing Kalshi to geofence Nevada and halt trading for users in the state. Polymarket, which operates on a different regulatory footing but faces the same underlying classification dispute, is exposed to the same state-by-state enforcement playbook.
“The ruling could embolden other states to sue Kalshi in state court and seek injunctions to block event contracts, a strategy that has so far succeeded in every case brought,” said Daniel Wallach, a gaming attorney.
Tennessee went the other way
The Nevada decision deepens a jurisdictional split. On February 19, the U.S. District Court for the Middle District of Tennessee granted Kalshi a preliminary injunction against state regulators, finding that sports event contracts are likely “swaps” and that federal law likely preempts state enforcement.
Connecticut’s Department of Consumer Protection issued a cease-and-desist to Kalshi in December 2025, alleging unlicensed online gambling. New Jersey’s Division of Gaming Enforcement attempted a similar move in May 2025 before a federal court sided with Kalshi. At least 20 federal lawsuits related to prediction market jurisdiction have been filed nationwide.
The Commodity Futures Trading Commission (CFTC), under Chair Michael Selig, has shifted from observer to active advocate. The agency filed an amicus brief in the Ninth Circuit supporting Crypto.com against the NGCB, arguing that “states cannot invade the CFTC’s exclusive jurisdiction over CFTC-regulated designated contract markets by re-characterizing swaps trading on DCMs as illegal gambling.”
Selig said the CFTC “will no longer sit idly by while overzealous state governments undermine the agency’s exclusive jurisdiction.”
The NGCB is unmoved. “Wagering occurs whether the contract is listed on an exchange regulated by the CFTC or elsewhere,” it said in an official notice last year.
Money is part of the equation
The enforcement push has a financial dimension. In North Carolina, licensed sportsbooks pay an 18% tax on gross revenue. Prediction markets, classified as financial exchanges, pay the 2.25% corporate tax rate. In Nevada, which has no corporate income tax, prediction markets may pay nothing compared to the 6.75% levied on sportsbooks.
Tax disparities and surging prediction market volume are coinciding with increased state enforcement activity. Total volume hit an estimated $44 billion in 2025. Kalshi alone reported nearly $10 billion in trading volume in January 2026, driven largely by sports contracts.
DraftKings and FanDuel have both launched prediction-style products to compete in the space, reflecting the overlap between regulated gambling and financial markets.
“What’s happened is the lines between gambling and investing have been blurred. Eventually this is going to come to a head,” said John Holden, a professor at Indiana University.
