Nevada Federal Ruling Deals Major Blow to Kalshi’s Sports Event Markets
Posted on: November 26, 2025, 05:54h.
Last updated on: November 26, 2025, 05:54h.
- Nevada judge rules Kalshi’s sports-event contracts are unlicensed gambling products.
- Decision weakens federal preemption arguments prediction markets use against states.
- Sportsbook stocks, including DraftKings, rise as rivals to face stricter scrutiny.
A federal judge in Las Vegas has ruled, in effect, that Kalshi’s “sports-event” contracts amount to unlicensed gambling – not regulated financial instruments under federal law.
US District Judge Andrew Gordon’s ruling undermines the core assumption of Kalshi’s and similar platforms’ business models: that federal oversight automatically shields them from state gambling laws. Kalshi has presented the same argument in multiple legal battles with state regulators across the US, and so the ruling could ripple far beyond Nevada.
Shares in US regulated sports betting platforms rose on the news, with DraftKings’ stock climbing by 7.7%.
What’s an Event Contract?
Kalshi is regulated by the CFTC because the product it offers, events contracts, are a type of derivative. These contracts allow users to speculate on the outcome of a specific event by placing money on a “yes” or “no” eventuality before expiring.
Judge Gordon rejected Kalshi’s claim that contracts on sporting outcomes qualify as “swaps” under the Commodity Exchange Act (CEA), which would put them under the jurisdiction of the CFTC and pre-empt state gambling law.
That interpretation is “strained,” and would, if accepted, effectively convert all sports betting into federally regulated derivatives trading, upending decades of state-level legal gambling frameworks, the judge said.
Kalshi’s interpretation would require all sports betting across the country to come within the jurisdiction of the CFTC,” rather than state and tribal gaming regulators, wrote the judge. “That interpretation upsets decades of federalism regarding gaming regulation, is contrary to Congress’ intent … and cannot be sustained.”
And, more bluntly: “Nobody thought sports bets were commodities or excluded commodities or swaps until some brilliant people at Kalshi [did].”
Kalshi’s Shield Cracks
The case came about after Nevada sent Kalshi a cease-and-desist letter in March, accusing it of violating state gambling laws and warning that the state could pursue civil or criminal penalties. The company sued Nevada in response, winning a temporary order from Gordon blocking the state from taking action.
Gordon dissolved the preliminary injunction he granted earlier this year that had protected Kalshi from enforcement by Nevada regulators. Now, with the injunction gone, they are free to act against the prediction platform.
Things were looking great for Kalshi in October 2024, when a federal court allowed the company to list political event contracts ahead of the presidential election. That indicated federal courts were open to treating at least some prediction markets as lawful derivatives. Suddenly, the ground is far shakier for Kalshi
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