In a significant legal setback for prediction market platform Kalshi, a panel of the U.S. Court of Appeals for the Ninth Circuit on Thursday denied the company's emergency motion for an administrative stay. This decision clears the way for the state of Nevada to potentially impose a temporary restraining order against Kalshi, which could force the platform to cease all operations for Nevada residents for at least two weeks pending a hearing on a preliminary injunction.
The legal battle stems from a cease-and-desist order sent to Kalshi by the Nevada Gaming Control Board in March 2025, ordering it to stop offering sports-related prediction market contracts. Kalshi argued that a subsequent temporary restraining order application by the state sought to prohibit it from offering all its event contracts. The company attempted to move the case to federal court, but the appeals court's denial means the case will likely be thrown back to a Nevada state court.
Kalshi had warned the court it "faces imminent harm" without a stay, as it could be forced to litigate the same jurisdictional issue—whether Nevada state regulators have authority over its federally-approved contracts—in four different venues simultaneously. This, the company argued, created "an untenable risk of subjecting Kalshi to conflicting federal and state court decisions." The appeals court found this argument insufficient to warrant intervention at this stage.
The core conflict pits state gambling laws against federal financial regulation. Kalshi operates as a designated contract market (DCM) under the oversight of the Commodity Futures Trading Commission (CFTC), which has argued it has sole jurisdiction over such prediction market providers. Nevada and regulators in over a dozen other states contend that at least sports-related contracts constitute illegal gambling under state law.
Legal experts note the ruling is a victory for state-level financial oversight and underscores the power states retain over activities they define as gambling. The decision may embolden other states to initiate similar enforcement actions, increasing regulatory uncertainty for the entire prediction market and adjacent fintech sectors. The final resolution of this constitutional clash over preemption will have profound implications for the future of prediction markets and the balance of power between state and federal financial regulators.
