Kalshi is facing legal challenges this week. Arizona’s Attorney General filed a criminal complaint against the online prediction market for operating an illegal gambling business. Meanwhile, a Nevada judge has temporarily banned it from operating in the state due to a case by state regulators. Nevada sued Kalshi in February to prevent it from operating without proper gaming licenses and engaging users under 21, which violates state laws.
The state requested a temporary restraining order against Kalshi, which was granted by Judge Jason D. Woodbury. Woodbury stated that Kalshi is unlicensed under the Nevada Gaming Control Act and operates a “percentage game,” perceived as gambling. Kalshi claims that registration with the Commodity Futures Trade Commission exempts it from state laws, though the federal vs. state law issue remains unresolved.
Kalshi did not comment on these developments. Wired first reported on the judge’s decision, while Nevada has successfully banned competitors like Coinbase and Polymarket. This case is part of various state cases arguing that prediction markets like Kalshi are illegal. Federal officials defend the prediction market industry, with CFTC Chairman Mike Selig opposing Arizona’s criminal charges against Kalshi, suggesting it’s a jurisdictional issue.
The situation highlights a looming regulatory battle between state and federal authorities regarding prediction markets.