The U.S. Ninth Circuit Court of Appeals has denied prediction-market operator Kalshi's emergency request for an administrative stay in its legal battle with Nevada regulators. This procedural setback, reported on Tuesday, removes a temporary shield that would have blocked Nevada from pursuing civil enforcement while the court considers a broader request for relief.
The decision allows Nevada to file a civil enforcement action in state court as early as Tuesday evening, with a temporary restraining order (TRO) expected within days. Such an order would likely force Kalshi to halt its operations in the state while the dispute proceeds. The case centers on whether Kalshi's event-based contracts, which allow users to wager on real-world events like election results and sports outcomes, fall under federal commodities regulation overseen by the Commodity Futures Trading Commission (CFTC) or whether states retain authority to restrict the products as unlawful sports betting or gaming.
Kalshi has argued that federal law preempts state enforcement, citing its status as a CFTC-regulated exchange. Nevada regulators have rejected this view, asserting jurisdiction over products offered to residents within the state. Legal experts note the decision indicates a willingness to let state enforcement actions proceed through normal channels and could embolden other states to pursue similar measures.
Kalshi's next potential move is an emergency application to the U.S. Supreme Court's "shadow" docket, which allows justices to issue short-term administrative stays to preserve the status quo. Such intervention is discretionary and typically reserved for cases where immediate enforcement would cause irreparable harm. The Ninth Circuit's denial does not resolve the underlying legal questions but shifts near-term leverage toward Nevada, increasing the likelihood of rapid enforcement absent Supreme Court action.
