One of the largest prediction markets has found itself on the defensive as its attempt to leap into sports gambling appears to have backfired.
Kalshi's Sports Betting Dreams Hit Dead End as Nevada Countersues
18 February 2026 - 12:33 CET
Kalshi’s bid to get into sports betting has not only been dismissed by federal court, but its appeal has also been quashed. For the past year, the prediction market has been embroiled in a legal dispute with Nevada over its controversial sports-
betting product in the state. That battle appears all but lost as the company is now being countersued.
The rise of prediction markets
Prediction markets have seen a monumental rise in popularity in the last few years. From just being a novelty in the crypto world, they have now moved as far ahead as taking positions on the outome of a presidential election.
Polymarket and Kalshi, the two largest, use a blockchain-based platform to let users bet on the outcome of any event, no matter how unlikely.
Last year, prediction markets fell under the purview of the Commodity Futures Trading Commission (CFTC). The agency’s oversight meant that these marketplaces could relabel their real-world contracts as regulated swaps, thereby passing traditional gambling laws.
However, that approach appears to have backfired.
Battle of the regulators
In 2025, Kalshi took a bold step and ventured into the massive sport betting market in the US. However, Kalshi’s move was doomed from the onset, facing strong
opposition from Nevada.
The US state, home to the gambling haven of Las Vegas, moved federal court to stop Kalshi’s sports-betting contracts. Kalshi argued that since predictions market are CFTC regulated, those do not fall under the traditional gambling laws. Kalshi’s defense was shut down by the federal court in Nevada.
The prediction market moved to appeal the verdict, which has also been quashed. But the bad news doesn’t end there, it must now defend itself against Nevada’s countersuit. If Kalshi loses the case, it can end up paying substantial fines and could even be banned in the state.
There may still be a ray of hope for Kalshi as CFTC chair Michael Selig warned state gaming regulators to not interfere with prediction markets, as
reported by Sandmark.
Separately, the CFTC and various state regulators have been fighting a battle to seize control of these marketplaces. While Kalshi's Nevada dream may be slowly turning into a nightmare, it's likely that the final outcome may be decided by who wins the clash between state and federal authorities.
