Kalshi Fights Nevada in High

The legal dispute centers on whether Nevada has the authority to restrict Kalshi’s sports and election-related markets, despite the platform being registered with the Commodity Futures Trading CommissionImage Source: Shutterstock.com

Kalshi, a company running prediction markets, is pushing hard to stop Nevada officialsfrom banning its trading contracts. 

Kalshi Argues Federal Law Overrides Nevada in Sports Betting Dispute

The firm claims that federal law, not state rules, decides if its business is legal. Kalshitold a court that the Commodity Exchange Act (CEA), which controls futures trading across the country, trumps any state gambling laws that might clash with it.

This legal fight is about whether Nevadacan limit Kalshi’s sports and election event marketseven though the platform is registered with the Commodity Futures Trading Commission (CFTC). Kalshisays the CFTCcan decide if these contracts are legal. Since the federal regulator has not banned Kalshi’s offerings, the platform argues the state cannot step in.

The argument started when the Nevada Attorney Generalfiled a motion to dismiss, claiming Kalshi’s operations break the state’s gaming laws. Kalshifired back, saying this view goes against constitutional principles that give Congress power over state law when it comes to controlling interstate commerce, including financial markets like Kalshi’s.

Referencing the Supreme Court’s decision in Murphy v. NCAA, Kalshi claimed that Congress has the authority to control sports betting. Although Kalshi’s summary of the ruling misquoted the original text, the company maintained that the main legal argument remains valid: federal power in this area ngakes precedence.

Experts Say Kalshi’s Case Could Shape the Future of US Prediction Markets

Legal scholars have pointed out how crucial this argument is. Ryan Rodenbergfrom Florida State Universitynoted that Kalshi’s attorneys are going all-in on their federal preemption theory through their position as a CFTC-approved exchange. He also highlighted the use of Murphy as a daring but applicable citation to stress congressional power.

The company also reminded the court about a recent preliminary injunction that stoppedNevadafrom ngaking legal action against it. Kalshicriticized the state’s dismissal motion for ignoring that ruling and for repeating arguments that the court had already rejected.

Kalshialso argued that Nevada’s stance shows a misunderstanding of how state and federal jurisdictions relate. It said the state relied on procedural defenses because it lacked strong legal grounds.This case mirrors a similar dispute in New Jersey, where Kalshi also got a preliminary injunction. How these cases turn out could affect the future of regulated prediction markets that operate across state lines.