A federal appeals court has ruled against Kalshi, allowing Nevada state authorities to move forward with a temporary restraining order targeting the prediction market platform’s sports event contracts. The Ninth Circuit Appeals Court on Thursday denied Kalshi’s emergency request to halt a lower court proceeding, sending the case back to federal court. The decision opens the door for Nevada regulators to take direct action against the company.
Gaming lawyer Daniel Wallach stated that a temporary restraining order against Kalshi now appears imminent following the ruling. He noted that the platform would be unable to operate in Nevada for at least 14 days until a preliminary injunction hearing takes place. The development marks a significant setback for Kalshi in its ongoing legal dispute with state authorities.
The conflict stems from a cease-and-desist order the Nevada Gaming Control Board sent to Kalshi in March, alleging that its sports event contracts constitute unlicensed sports betting under Nevada law. Kalshi has pushed back in court, arguing that its event contracts fall exclusively under federal jurisdiction through the Commodity Futures Trading Commission. The company has also contended that any block on its contracts would cause it immediate and serious harm.
In a motion filed on March 13, Kalshi warned that allowing Nevada to enforce a restraining order while federal litigation remains pending creates a substantial risk of conflicting judicial outcomes. The company argued that different courts could reach opposing conclusions on whether federal commodities law overrides state gambling regulations. Kalshi described this scenario as potentially creating what it called jurisdictional chaos.
The legal battles extend well beyond Nevada. Regulators in Connecticut, New York, New Jersey, and other states have also sought to take action over sports event contracts. Kalshi and rival prediction market platforms Polymarket, Crypto.com, and Coinbase are currently engaged in legal disputes with multiple states over similar issues.
The broader prediction market sector has seen rapid growth in recent months, with weekly trading volumes now consistently surpassing $2 billion, according to data from Dune Analytics. This surge in activity has drawn increased scrutiny from lawmakers, who have raised concerns about the potential for insider trading and market manipulation within these platforms. The outcome of Kalshi’s legal battles could have wide-reaching implications for the industry as a whole.
Originally reported by CoinTelegraph.
