Federal Court Remands Nevada's Kalshi Case to State Court
A federal judge remanded Nevada Gaming Control Board's case against Kalshi to state court, putting the CFTC-regulated prediction market one step closer to a trading halt in the state. Legal analyst Daniel Wallach warned the decision could trigger a domino effect across other state lawsuits.
Key Takeaway
State enforcement could fragment prediction markets after ₱3.7 trillion ($63.5 billion) trading year if other states follow Nevada's playbook.
The federal court found that Nevada Gaming Control Board's claims arise under state law and the Commodity Exchange Act does not completely preempt those claims. A plain reading of the CEA's savings clause shows Congress did not intend to completely displace ordinarily applicable state law, according to the court filing. The court ruled it lacks subject matter jurisdiction and granted remand. The same court remanded Nevada's case against Polymarket's parent company Blockratize on the same day.
Wallach said the remand could trigger a domino effect on Kalshi's lawsuits with other state governments. Once Kalshi has to geofence in one state, it becomes harder for the company to argue in other cases that implementing geolocation technology would impose irreparable harm. This decision puts the company closer to being forced out of Nevada, which would mark the first state where Kalshi ceased offering event contracts due to a court ruling.
The stakes are massive for the prediction market industry. Blockchain security firm CertiK reported that prediction market trading volume hit ₱3.7 trillion ($63.5 billion) in 2025, roughly quadrupling from the previous year. CertiK warned that if many states take this approach, platforms face building state-by-state compliance infrastructure or geo-blocking restricted states. Both options fragment liquidity, which directly undermines the core value proposition of prediction markets.
Kalshi's next move could be an emergency application to the Supreme Court seeking a temporary stay of the remand while the Ninth Circuit considers its appeal. Justice Elena Kagan would oversee any emergency application since she oversees the Ninth Circuit. Former interim CFTC Chair Caroline Pham told a Stanford Blockchain Club panel last month she thinks the matter will reach the Supreme Court, describing it as a clash between derivatives oversight and states' traditional control over gambling. Nevada initially issued its cease-and-desist to Kalshi in March 2024.
This article was written based on reporting from Decrypt.
