Kalshi Faces Legal Battles in Nevada and Arizona Over Prediction Markets
Kalshi, an online prediction market, is facing increasing legal scrutiny from state regulators. A Nevada judge has temporarily blocked the company from operating in the state, while Arizona’s attorney general has filed criminal charges against it. These actions highlight the ongoing tension between Kalshi’s claim of federal regulatory oversight and states’ rights to regulate gambling within their borders.
Nevada Temporarily Bans Kalshi
On Friday, March 20, 2026, a Nevada judge granted a temporary restraining order against Kalshi, preventing the company from operating within the state. The lawsuit was brought by the Nevada Gaming Control Board, which argues that Kalshi is facilitating unlicensed gambling by offering contracts on events like sports, elections, and entertainment [1]. The Board maintains Kalshi has not obtained the necessary gaming licenses and violates state law by allowing users under 21 to participate [3].
Judge Jason D. Woodbury ruled that Kalshi is not licensed under the Nevada Gaming Control Act and operates a “percentage game,” which the state defines as gambling [3]. A hearing on the restraining order is scheduled for early next month [3].
Kalshi argues that its registration with the Commodity Futures Trading Commission (CFTC) grants it exclusive federal regulatory jurisdiction, exempting it from state laws [3]. However, the judge noted that the question of federal preemption is unsettled, and courts have generally not supported Kalshi’s position [3]. The company declined to comment on the ruling [3].
Arizona Files Criminal Complaint
In a separate legal challenge, the Arizona attorney general filed a 20-count criminal complaint against Kalshi on Tuesday, March 17, 2026, accusing the company of running an illegal gambling business [3]. The complaint alleges violations of state laws prohibiting unlicensed wagering and betting on elections.
Broader Regulatory Conflict
These cases are part of a larger dispute between the CFTC and state gaming authorities over the regulation of prediction markets. The CFTC asserts exclusive jurisdiction over these markets, arguing that event contracts are “swaps” – derivative instruments subject to federal regulation under the Commodity Exchange Act [4]. CFTC Chairman Michael Selig has stated the agency will defend its jurisdiction against state interference [4].
Nevada has previously taken action against other prediction market platforms, securing temporary restraining orders against Polymarket, Robinhood, Crypto.com, and Coinbase [1], [4]. Coinbase has characterized Nevada’s actions as a “state power grab” prohibited by Congress [4].