Kalshi’s Meteoric Rise Meets Legal Storm
Kalshi Inc., the New York-based prediction market platform, has seen its valuation rocket to $22 billion after closing a $1 billion funding round led by Coatue Management.
Yet, as Kalshi’s profile has soared, so too has regulatory scrutiny. On Thursday, the Ninth Circuit Court of Appeals denied Kalshi’s attempt to block a temporary restraining order (TRO) from Nevada authorities, allowing the state to halt its operations for at least two weeks. The legal standoff highlights a growing rift between federal and state regulators over who controls the fast-evolving world of prediction markets.
Nevada Pushes Pause on Prediction Trades
Nevada became the first U.S. state to ban Kalshi from offering event contracts—covering sports, politics, and entertainment—within its borders. The TRO, issued in late March 2025, will remain in place until April 3, when a hearing could determine whether Kalshi faces a longer ban via preliminary injunction. The Nevada Gaming Control Board initiated the action with a cease-and-desist order earlier this year, initially targeting sports-related contracts but later expanding its scope to all event-based offerings.
For now, no Nevadan can legally trade on Kalshi.
A March 2025 cease-and-desist order from the Nevada Gaming Control Board was the first to target all of Kalshi's event contracts, not just sports.
A state judge ruled that Nevada regulators are “reasonably likely to prevail on the merits” of their case against Kalshi. Mike Dreitzer, chair of the Gaming Control Board, argued that unlicensed gambling remains illegal under Nevada law—even if platforms like Kalshi operate under federal oversight. This temporary victory for state regulators sets up a direct confrontation with federal agencies over jurisdiction.
See Also
$22 Billion Valuation Amid Regulatory Heat
On paper, Kalshi’s surging valuation and investor confidence paint a picture of unstoppable momentum. In February alone, trading volume on the platform surpassed $10 billion—twelve times higher than just six months prior—and annualized revenue reached $1.5 billion. These numbers rival some established financial exchanges and reflect both growing user interest and institutional backing.
But despite these headline figures, legal uncertainty looms large. The Ninth Circuit Court of Appeals has scheduled a federal hearing for April 16 that could unwind Nevada’s enforcement actions or reinforce them. Meanwhile, Kalshi and similar platforms face pushback from regulators in more than a dozen states who claim jurisdiction over betting products linked to sports and other events.
CFTC’s Turf War With States Grows
The Commodity Futures Trading Commission (CFTC), which oversees Kalshi as a regulated financial exchange, maintains that it holds sole authority over prediction markets nationwide. The CFTC has filed amicus briefs defending this stance in ongoing federal cases and even signed an agreement with Major League Baseball as part of broader efforts to clarify its jurisdictional boundaries. However, state-level regulators remain unconvinced—especially when it comes to products resembling traditional gambling.
According to decrypt.co, Nevada's move marks an escalation in this regulatory tug-of-war: while federal authorities have sometimes sided with prediction markets (as seen when the CFTC dropped its appeal against Kalshi's election contracts in May 2025), states like Nevada are asserting their own powers through court orders and enforcement actions.
Investors Double Down Despite Legal Risks
Despite—or perhaps because of—the mounting regulatory challenges, investors continue to pour money into Kalshi. The latest $1 billion round was led by Coatue Management and followed substantial investments from Paradigm and others just months earlier. This influx of capital suggests that backers see long-term potential even as short-term access to key markets like Nevada remains blocked.
Whether this optimism is justified may hinge on upcoming court decisions: if federal courts side with Kalshi and the CFTC on jurisdictional questions next month, it could open doors for wider national expansion; if not, more states might follow Nevada's lead in imposing bans or restrictions. For now, Kalshi stands at the intersection of innovation and regulation—flush with cash but facing an uncertain path forward.
What remains under scrutiny
If Nevada’s preliminary injunction is granted at the April 3 hearing, Kalshi will be barred from offering event contracts in the state beyond the current 14-day restraining order; otherwise, operations could resume immediately unless further federal action intervenes before the Ninth Circuit’s scheduled hearing on April 16.