A federal judge in Nevada has dissolved an injunction that allowed prediction market operator Kalshi to offer sports event contracts in the state, ruling that the products are sports wagers rather than federally regulated "swaps".
Nevada Court Strips Kalshi’s ‘Federal Shield’ on Sports Betting
26 November 2025 - 11:47 CET
By Matt Neill
The decision by US District Judge Andrew Gordon strips Kalshi of its primary legal defense, that its status as a CFTC-regulated exchange preempts state gambling laws. The ruling clears the way for the Nevada Gaming Control Board (NGCB) to treat the contracts as unlicensed sports betting, exposing the platform to potential civil and criminal enforcement.
Robinhood (HOOD), which handles the majority of Kalshi's retail volume, has agreed to cease offering new sports contracts to Nevada residents pending further proceedings. Kalshi has filed an emergency motion to stay the ruling, warning that it faces "imminent criminal enforcement" without judicial relief.
'Strained reading' of the law
Judge Gordon’s opinion dismantles the core legal strategy employed by the prediction market sector. He rejected Kalshi’s argument that the Commodity Exchange Act (CEA) covers sports outcomes, calling it a "strained reading" of an already "convoluted" statute.
“Congress did not define a swap as a contract on anything that happens or could happen,” Gordon wrote, warning that Kalshi's interpretation had "no limiting principle". He noted that accepting Kalshi’s view would allow casinos to rebrand as CFTC venues to offer nationwide sports betting to 18-year-olds, bypassing state taxes and age restrictions.
Valuation thesis at risk
The ruling lands at a perilous moment for the sector. Kalshi recently raised capital at an $11bn valuation, while rival Polymarket is reportedly seeking funding at a valuation of $12-15bn.
These premiums are predicated on the "Federal Shield" thesis: that prediction markets can scale nationally under a single CFTC license rather than battling 50 separate state gaming regulators. By affirming Nevada's right to regulate event contracts as "betting chips," the court has struck a blow to that scalability argument.
With parallel enforcement actions pending in New Jersey and Maryland, the industry now faces a fractured regulatory landscape that could severely cap its total addressable market.
