Feb. 24, 2026, 2:13 p.m. PT
The Nevada Gaming Control Board’s legal effort to preserve the state’s golden goose — a flourishing gambling industry devoid of federal intervention — is expected to be a multi-year endeavor that could bounce among Congress, federal court, state court, and the court of public opinion, experts say.
“Courts will move slowly even as the popularity of prediction-market platforms increases rapidly,” says Steven Light, a visiting professor of Indian Nations Gaming and Governance at UNLV’s Boyd Law School. “What happens in court and what happens in the real world often take divergent paths.”
Kalshi, the only one of a handful of ubiquitous prediction markets accepting sports bets in Nevada, operates a derivatives exchange — a place where futures and options are sold. Kalshi began dabbling in sports betting in January 2025. A year later, the platform reported a Super Bowl betting handle of more than $1 billion.
“Trade on anything,” is the platform’s slogan. But prediction markets alone don’t make money, says the lawsuit filed by the Gaming Control Board (GCB) last week. Sports bets, the suit alleges, make up 90% of Kalshi’s revenue.
In late December, the Financial Times reported trading volume on sports bets on Kalshi since its inception reached $16.8 billion, compared with $4.9 billion on other topics. By comparison, Nevada’s sports betting handle for 2025 was $8 billion, down 9% from the previous year.
In 2025, legal bettors in 39 states, including Nevada, wagered a record $165 billion, up almost 11% from 2024. By comparison, in 2017, the last year of Nevada’s reign as America’s only legal sports betting option, bettors laid down $248.8 million.
Kalshi intends to upend state regulation not only in Nevada, but in all 50 states, 38 of which set up regulatory schemes since the Supreme Court opened the door to sports betting outside Nevada in 2018.
“This is a big issue because now we have states able to decide for themselves whether or not they want to legalize sports wagering,” says Kathryn Rand, who is also a visiting professor at Boyd Law, and along with Light, is regarded as a leading expert in tribal gaming. “The majority of states have done that and have invested in sports wagering as a form of legalized gambling that is regulated and taxed.”
To have an upstart like Kalshi, or other prediction markets, “come in and offer what to the public looks like the same thing without the hassles of regulations and without any state taxation is a really significant shift, certainly for Nevada, but for all of the other states and tribes,” Rand adds.
The GCB issued a cease and desist letter last year when Kalshi began a sports betting pool. Kalshi responded with a federal lawsuit and successfully sought an injunction from Nevada U.S. District Judge Andrew Gordon. In November, Gordon lifted the injunction and Kalshi appealed to the Ninth Circuit Court of Appeals.
The GCB agreed to hold off on enforcement while the Ninth Circuit considered Kalshi’s appeal, but later reconsidered. Kalshi, the GCB wrote to the court, has “continued to dramatically expand its business, rather than attempting to maintain any kind of status quo. Kalshi has massively increased its trading volumes, and has aggressively (and wrongly) marketed its sports bets as ‘100% legal’ in ‘all 50 States.’”
Last Tuesday, the Ninth Circuit rejected Kalshi’s appeal, opening the door for Nevada to file suit in state court. The GCB also filed a civil enforcement action seeking an injunction to stop Kalshi from taking bets in the state.
In the public interest?
Kalshi, Nevada regulators asserted in the lawsuit, pays no gaming taxes, has no gaming license, no physical location in the state, and caters to bettors under the age of 21, all of which is verboten under Nevada law. The platform and others like it have no constraints on money laundering and no means of deterring insider trading by individuals who can affect the outcome of an event, argues the GCB.
Nevada’s suit cites a CNBC interview with Kalshi’s CEO Tarek Mounsor, who says insider training is “fair game” and “part of the risk in the market.”
While betting in all forms remains subject to cheating, as recent sports scandals have shown, legal sportsbooks are often responsible for detecting breaches of integrity.
Gamblers, Light says, seek betting options “with the least friction and where they can get the most bang for their buck. Prediction markets have rapidly taken over the public consciousness in that regard, especially for younger folks. I don’t know how you slow that train. That’s normally the role of the government.”
Concerns over integrity may give bettors pause, especially on a platform where individuals in positions of power have the ability to affect the outcome.
In January, an anonymous ‘trader’ won $400,000 betting that Venezuelan President Nicholas Maduro would soon be out of office.
“The bulk of the trader’s bids on the platform Polymarket were made mere hours before President Donald Trump announced the surprise nighttime raid that led to Maduro’s capture, fueling online suspicions of potential insider trading because of the timing of the wagers and the trader’s narrow activity on the platform,” PBS reported.
Before the Super Bowl, Kalshi took $47.3 million in wagers on whether Cardi B would perform during the halftime show.
The New York Times reported at least one bettor filed a complaint with the Commodities Futures Trading Commission regarding whether or not the singer’s dancing alongside others constituted a performance.
“According to a Kalshi spokesperson, ‘singing and dancing counted as a performance, but just dancing in the background did not,’” the Times reported. Since it was unclear whether Cardi B was singing, Kalshi refunded the bets.
In addition to integrity concerns, Kalshi also lacks the responsible gaming initiatives that are required of Nevada’s licensed casinos.
“People are adults, and they’re allowed to spend their money however they want, and if they lose their shirt, that’s on them,” Kalshi counsel Josh Sterling said last year.
Gambling experts contend prediction markets are likely to be confused with legal, state regulated sites, but lack some of the guardrails of state-regulated betting.
The explosion of prediction markets “has happened so fast,” says Light of Boyd Law. The discussion of the legal battles, he says, “doesn’t necessarily take into account a broader societal discussion” that America has yet to have. “Why prediction markets? What rationale do they serve? Who benefits, who loses? How should they be regulated, and who gets to decide?”
Kalshi maintains that federal regulation of prediction markets by the CFTC trumps state oversight under the Preemption Doctrine of the U.S. Constitution’s Supremacy Clause, which says federal law prevails over state and local law, except in some circumstances.
The argument is “an extension of the general constitutional framework of federalism,” and “the idea of the sovereign authority of the federal government versus the sovereign authority of states,” says Light. “In that sense, this is just yet another example of a tussle, potentially, between federal authority and state.”
Some laws dictate controlling authority, while others do not. Federal preemption is implied when an area or field, such as immigration, is completely regulated by the federal government. Federal law is also preemptive when state and federal statutes conflict and it’s impossible to comply with both.
Kalshi argues the CFTC “has exclusive jurisdiction over these kinds of prediction contracts,” says Rand. “Exclusive federal jurisdiction would preempt states or tribes from attempting to apply their own laws and regulations to the same event contracts.”
Rand says about 20 states and a handful of tribal operations have filed suit against Kalshi.
Democratic Congresswoman Dina Titus agrees the dispute is over states’ rights.
“The Commodity Exchange Act (which gave way to the CFTC) does not expressly preempt state gambling laws and Congress clearly did not intend to displace longstanding state authority over sports wagering,” Titus said via email. “Sports ‘event contracts’ function as gaming products. Simply labeling something a ‘financial derivative’ does not transform what is effectively sports betting into a federally protected financial instrument.”
A bet by any other name
Until recently, prediction markets have eschewed the ‘B word’ – betting – in favor of calling their transactions ‘swaps’ or ‘trades’, in an effort to maintain CFTC jurisdiction.
“We normally wouldn’t think about the CFTC as having jurisdiction over wagering,” says Rand. “We think about the CFTC as having jurisdiction over financial instruments and commodities.”
Kalshi is embracing the gambling label, billing itself as the “First Nationwide Legal Sports Betting Platform.”
Light says he wouldn’t be surprised if Kalshi drops ‘betting’ from its vernacular as it becomes “increasingly sensitive to public relations. How people think about what’s going on also influences how policymakers think about it and act on it, as well.”
“These products are commodity derivatives and squarely within the CFTC’s regulatory remit,” CFTC chairman Mike Selig said on social media last week, after the commission filed an amicus brief in support of Kalshi with the Ninth Circuit, though too late to affect Kalshi’s appeal.
The five members of the CFTC are appointed by the president, who along with his family, has business ties to at least three prediction market platforms.
Donald Trump Jr., the president’s son, is currently a “strategic advisor” to Kalshi and an investor in Polymarket, and Crypto.com is teaming up with Trump’s Truth Social to allow its users to make crypto bets.
Earlier this month, Selig announced the commission was revoking proposed rulemaking that would have prohibited prediction markets from taking bets on political races.
If you can’t beat ‘em…
“To me, this is clearly gambling,” Thomas Reeg, CEO of Caesars Entertainment said during the company’s fourth-quarter of 2025 earnings call this month.
Reeg added that Caesars has no intention of getting in the prediction markets, at least for now. However, he added, if “there is a legal path for prediction markets that satisfies regulators on the brick-and-mortar side, we will find a way to participate.”
One legal effort winding through the courts would allow state regulation of event contracts as sports wagering “to be seen as legal concurrent regulatory authority under federal law,” says Rand.
Should courts fine sporting event contracts are sports wagering, as Nevada contends, the state “could consider allowing its gaming licensees to offer similar sporting event contracts on similar platforms statewide,” says Light, adding they may also be subject to regulation by the CFTC.
The Nevada Resort Association, which filed an amicus brief opposing Kalshi’s federal appeal, declined to respond to a request for comment given the pending litigation.
Kalshi also did not respond to the Nevada Current’s request for comment on Nevada’s lawsuit.