Nevada ATTACKS Billion-Dollar Platform — Feds FIRE Back

Nevada just declared war on a federally regulated betting platform that exploded to over a billion dollars in Super Bowl wagers, while Washington’s top commodity regulator fired back with a threat that could reshape gambling nationwide.

Story Snapshot

Nevada’s Gaming Control Board sued Kalshi in state court, claiming the prediction market platform operates as unlicensed sports betting that threatens the state’s $15 billion gaming industry
The CFTC chairman released a same-day video defending prediction markets and warning states “we will see you in court,” escalating federal-state tensions
Kalshi’s Super Bowl betting volume surged 27-fold year-over-year, fueling Nevada’s alarm about revenue losses to unregulated competitors
More than 20 states have filed suits against Kalshi with mixed results, setting up a likely Supreme Court showdown over federal preemption

Nevada Fires the Opening Salvo in Carson City Court

Nevada filed its civil enforcement lawsuit in Carson City District Court on a Tuesday in mid-February 2026, mere days after the 9th Circuit Court of Appeals denied Kalshi’s request to halt state action. The Gaming Control Board and Attorney General accused the platform of conducting unlicensed sports betting operations that circumvent state taxes, licensing requirements, and consumer protections. Jessica Whalen from the Attorney General’s office called Kalshi an “existential threat” to Nevada’s regulated gambling framework, while the Nevada Resort Association pointed to dramatic shifts in parlay wagering volume away from licensed casinos.

The timing wasn’t coincidental. Nevada had been locked in legal combat with Kalshi since March 2025, when regulators first issued a cease-and-desist order. A federal judge initially granted Kalshi a preliminary injunction in April 2025, allowing operations to continue, but a Nevada judge dissolved that protection in December 2025 after ruling certain contracts resembled sports bets. When a federal judge ruled in November 2025 that Kalshi must cease Nevada operations, the company appealed, only to have the 9th Circuit reject its stay request in early February 2026, clearing Nevada’s path to this latest courtroom confrontation.

The CFTC Draws a Federal Line in the Sand

Hours after Nevada’s lawsuit landed, Commodity Futures Trading Commission Chairman Michael Selig released a video statement that left no ambiguity about Washington’s position. Selig declared the CFTC holds exclusive federal authority over prediction markets under the Commodity Exchange Act, directly challenging state gambling regulators who claim jurisdiction. His blunt warning to states pursuing Kalshi and similar platforms: “We will see you in court.” This aggressive posture reflects the Trump administration’s support for prediction markets, which gained prominence after the 2024 election drove massive trading volumes on platforms like Polymarket and Kalshi.

The CFTC registered Kalshi to operate “event contracts” that allow users to bet on outcomes ranging from sports to political events, arguing these differ fundamentally from traditional gambling. Kalshi claims federal approval grants it nationwide authority, bypassing the patchwork of state gaming laws that have governed betting since the Supreme Court struck down the federal sports betting ban in 2018. The platform launched sports contracts in early 2025 after securing CFTC approval, with sports wagers now constituting roughly 90 percent of its activity. Nevada regulators see this as semantic gymnastics designed to evade state oversight of what they consider obvious gambling operations.

Follow the Money and the Motivation

Nevada’s $15 billion gaming industry built its modern sports betting empire after the 2018 PASPA repeal, with casinos paying substantial licensing fees and taxes while operating under strict consumer protection rules. Kalshi’s model bypasses all of that, offering markets that look remarkably similar to sports bets without the regulatory burden. The platform’s Super Bowl volume tells the story: a 27-fold increase year-over-year, reaching over $1 billion in wagers. That’s money flowing away from Nevada’s licensed operators, who watch their parlay business shrink while an unlicensed competitor operates without consequence, at least until now.

Gaming attorney Daniel Wallach predicts Kalshi may ultimately seek a Supreme Court stay to continue Nevada operations while appeals wind through the system. The company has already filed a motion to move Nevada’s state lawsuit to federal court, arguing the case raises federal questions that demand federal jurisdiction. Meanwhile, Kalshi faces similar legal battles across more than 20 states, with mixed results creating a confusing patchwork. New Jersey granted an injunction that’s now under appeal. Massachusetts issued a state court injunction blocking Kalshi. Tennessee secured a temporary restraining order in January 2026. Tribal governments in California and Wisconsin filed separate suits alleging violations of the Indian Gaming Regulatory Act, with California courts ruling in Kalshi’s favor.

The Constitutional Clash Nobody Asked For

This fight boils down to federalism’s oldest tension: Does federal law preempt state police powers, or do states retain authority over activities within their borders? The Commodity Exchange Act grants the CFTC regulatory authority over commodity futures, which the agency interprets to include prediction markets as “event contracts.” States counter that gambling has always fallen under state jurisdiction, and calling sports bets “event contracts” doesn’t change their fundamental nature. Courts have split on the distinction, with some judges accepting Kalshi’s federal preemption argument and others ruling the contracts too closely resemble traditional sports betting to escape state authority.

The economic stakes extend far beyond Nevada. The broader sports betting industry generates over $100 billion in annual handle, while prediction markets remain a fraction of that size despite recent growth. A Supreme Court ruling favoring Kalshi could establish uniform national rules, potentially eroding state gambling monopolies and the tax revenue they generate. A ruling for the states would force prediction market platforms to navigate 50 different regulatory regimes, likely strangling expansion but preserving state control over an industry they’ve regulated for decades. NGCB Chair Mike Dreitzer and his state counterparts argue their regulations protect consumers and maintain gambling integrity, values that shouldn’t yield to federal overreach dressed up as financial innovation.

What Happens Next in This High-Stakes Gamble

Kalshi’s motion to federalize Nevada’s state court lawsuit remains pending, while the 9th Circuit appeal continues its slow march through the judicial system. Short term, injunctions in multiple states have already blocked Kalshi from operating in key markets, shifting betting volume back to licensed books. Long term, legal experts across the political spectrum expect the Supreme Court will eventually resolve the federal preemption question, either enabling prediction markets to operate nationwide under CFTC oversight or affirming states’ authority to ban what they consider unlicensed gambling within their borders.

The Trump administration’s CFTC clearly believes innovation in financial markets justifies federal supremacy over state gambling laws. Nevada regulators see an unlicensed competitor threatening their tax base and regulatory framework, hiding behind federal approval to avoid compliance costs their licensed operators must bear. Both sides have legitimate concerns rooted in reasonable interpretations of overlapping laws. What makes this particularly thorny is that Kalshi isn’t some offshore operation ignoring U.S. law entirely; it secured federal approval and now faces state prosecution for following what it claims are the rules that apply. Someone’s interpretation of federal authority must give way, and the answer will determine whether prediction markets become a national industry or remain fractured across state lines, if they survive at all.