A federal judge has ordered lawsuits involving prediction markets Kalshi and Polymarket against the Nevada Gaming Control Board (NGCB) to return to Nevada state court, while both companies pursue appeals aimed at preventing enforcement actions that could limit their operations in the state.
US District Judge Miranda M. Du ruled that the claims raised by Nevada regulators arise under state law and therefore should be handled by a Nevada court. The ruling sends the case to the First Judicial District Court in Carson City.
The Nevada Gaming Control Board had filed a civil enforcement action seeking to stop Kalshi from offering event-based contracts tied to sports outcomes in Nevada without a state gaming license.
The state’s complaint alleges violations of several Nevada gaming statutes and seeks declaratory and injunctive relief to block the company’s operations until it complies with licensing requirements.
Kalshi then removed the case to federal court, arguing that federal jurisdiction applied under multiple legal doctrines.
“The Court finds that the Board’s claims arise under state law,” Du has now written in the ruling.
Arguments over federal jurisdiction rejected
Kalshi argued that the dispute should remain in federal court because federal law is central to the case, citing the Commodity Exchange Act (CEA) and the authority of the Commodity Futures Trading Commission (CFTC).
The court rejected the argument that the federal question doctrine applied. The doctrine says federal courts have jurisdiction in cases where a plaintiff’s claim in state court raises an issue of federal law that is substantial, actually disputed, and capable of being resolved in federal court.
Under the ruling, Nevada’s claims relate primarily to whether Kalshi holds the required state license to operate in the jurisdiction.
“The Board can prove a violation of this provision based solely on Kalshi’s lack of a state license,” the decision states.
The court also rejected Kalshi’s argument that the CEA completely preempts state gaming laws.
Du cited language in the federal statute stating that nothing in the provision “shall supersede or limit the jurisdiction conferred on courts of the United States or any State.”
Because of that clause, the court concluded Congress did not intend to fully displace state authority in this area.
Federal officer removal claim dismissed
Kalshi also argued that the case should remain in federal court because the CFTC was a necessary party.
The court rejected that position as well, finding that the Nevada Gaming Control Board’s claims are directed at Kalshi’s compliance with state gaming laws rather than the actions of the federal regulator.
“The Board is not trying to enforce Nevada gaming law—or any state law—against the CFTC,” the ruling states.
As a result, the court concluded the federal regulator does not have a legal interest requiring its participation in the lawsuit.
Appeals filed and enforcement action pending
Following the remand decision, both Kalshi and Polymarket moved to appeal and requested administrative stays while the appeals are considered by the United States Court of Appeals for the Ninth Circuit.
Polymarket previously received a temporary restraining order on January 30 and already blocks access to its contracts in Nevada.
Kalshi’s contracts remain available nationwide, including in Nevada. However, the state is pursuing a temporary restraining order that could require the company to block access in the state.
The case is part of a series of disputes between prediction market operators and state regulators over whether event contracts tied to sports outcomes fall under federal derivatives oversight or state gaming law.
If the state court grants the restraining order, it would be the first time Kalshi blocks access to its sports contracts in a US state.
Original article: https://www.yogonet.com/international/news/2026/03/04/117888-kalshi-and-polymarket-appeal-after-federal-court-returns-nevada-gaming-dispute-to-state-court
