Kalshi Targeted by Nevada in Gaming Law Enforcement Crackdown

• Nevada to file civil enforcement case against Kalshi
  
• Appeal pending before Ninth Circuit over sports contracts
  
• State argues Kalshi harms regulated Nevada gaming market

Nevada’s top state lawyers have told the U.S. Court of Appeals for the Ninth Circuit that they intend to launch a civil enforcement case in state court against prediction-market operator Kalshi.

It’s the latest escalation in a legal fight that’s being viewed as a defining test of whether state gaming regulators can rein in federally regulated event-contract platforms.

In a letter submitted to the Ninth Circuit Court of Appeals Tuesday, Nevada’s Chief Deputy Solicitor General Jessica Whalan wrote that “Kalshi’s own actions now compel State Defendants to take action to stop Kalshi’s unlawful behavior.”

“At this point, failing to enforce Nevada state law against Kalshi would effectively grant Kalshi the stay it seeks despite the district court’s findings that Kalshi is unlikely to succeed on the merits and is causing irreparable harm to Nevada, its gaming industry, and the public,” she added.

Kalshi Model Undermined

Nevada sent Kalshi a cease-and-desist letter last 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 that blocked the state from taking action.

The ruling effectively undermines the core assumption of Kalshi’s and similar platforms’ business models: that federal oversight automatically shields them from state gambling laws. Kalshi appealed to the Ninth Circuit.

Increased Activity

Nevada’s latest move is likely an effort to prevent Kalshi from effectively gaining the protection of a stay while its appeal proceeds — a key point because the state argues no current order blocks it from enforcing Nevada law against the company.

The letter notes that Kalshi has continued to expand while seeking a stay, and that Nevada initially held off on enforcement while the stay request was under consideration.

The stakes extend beyond Nevada. Across the US, there is increasing friction between state gaming regulators and event-contract platforms that say they’re protected by federal oversight. Nevada’s move signals a willingness to test that assumption aggressively.