Appeals Court Denies Kalshi’s Request to Stay Nevada Injunction, Clearing Way for State Enforcement
Washington, D.C., March 20 2026 – The U.S. Court of Appeals for the Ninth Circuit rejected a last‑minute emergency motion filed by Kalshi Exchanges, LLC, a regulated U.S. prediction‑market platform, effectively allowing Nevada state authorities to move forward with a temporary restraining order (TRO) that bars the company from offering sports‑event contracts in the state.
The appellate decision, issued on Thursday, leaves the case pending in federal court but removes any barrier to Nevada’s Gaming Control Board enforcing its cease‑and‑desist order issued in March. Without a stay, Kalshi must comply with the TRO, which is expected to take effect immediately and remain in place until at least a preliminary‑injunction hearing, projected to occur within the next two weeks.
Legal backdrop
Nevada regulators allege that Kalshi’s “sports‑event contracts” constitute illegal, unlicensed sports betting under state law. The state’s Gaming Control Board argued that the contracts are fundamentally gambling products, not commodity futures, and therefore fall outside the jurisdiction of the Commodity Futures Trading Commission (CFTC).
Kalshi counters that its contracts are “event‑based derivatives” regulated exclusively by the CFTC, and that state interference would violate federal pre‑emption doctrine. The company also warned that an injunction would cause “imminent and irreparable harm” to its business, citing the growing demand for regulated prediction‑market products.
Ninth Circuit ruling
The Ninth Circuit, sitting en banc, denied Kalshi’s emergency request for a stay of the lower‑court proceeding. In a brief order, the judges noted that Kalshi had not demonstrated a likelihood of success on the merits sufficient to warrant extraordinary relief, nor had it shown that the balance of equities tipped in its favor. The decision sends the case back to the district court in Nevada and permits state officials to seek a TRO against Kalshi’s operations.
Gaming attorney Daniel Wallach, who follows the litigation closely, said that a TRO “appears imminent” and that, because a restraining order is not appealable under Nevada law, Kalshi will be required to suspend its Nevada activities for at least 14 days pending the next hearing.
“Kalshi would be forced to exit the state in the interim,” Wallach posted on X, adding that the company’s inability to operate could have a cascading impact on its liquidity and user base.
Industry context
Kalshi is part of a wave of regulated prediction‑market platforms—alongside Polymarket, Crypto.com, and Coinbase—that have seen weekly trading volumes rise above $2 billion, according to blockchain analytics firm Dune. The sector’s rapid growth has drawn scrutiny from both federal and state regulators, who are concerned about potential insider trading, market manipulation, and the blurring line between futures contracts and traditional gambling.
States such as Connecticut, New York, and New Jersey have already initiated or are contemplating legal actions against prediction‑market operators. While some jurisdictions have taken a more permissive stance, others, like Nevada, are asserting that existing gambling statutes supersede federal commodity‑trading regulation when the product bets on the outcome of a sporting event.
Analysis
Jurisdictional clash. Kalshi’s claim hinges on a classic pre‑emption argument: that the CFTC’s exclusive authority over commodity contracts should preclude state gambling regulators from imposing restrictions. The Ninth Circuit’s refusal to stay the state proceeding does not resolve the pre‑emption question, but it does underscore the court’s willingness to allow state enforcement actions to move forward while the federal issue is still being litigated.
Operational risk. The immediate effect of the TRO will be a halt to all Kalshi‑facilitated sports contracts in Nevada. Although Nevada accounts for a modest share of the platform’s overall volume, the precedent could encourage other states to seek similar orders, potentially fragmenting the market and increasing compliance costs for operators.
Regulatory signaling. By granting Nevada the ability to enforce its cease‑and‑desist, the appellate court may be signaling to other jurisdictions that state gambling laws remain potent tools against prediction markets, even where federal regulators have granted licenses. This could accelerate a wave of state‑level litigation and prompt the CFTC to clarify the scope of its jurisdiction over event‑based derivatives.
Key takeaways
- Ninth Circuit decision: The appeals court denied Kalshi’s request for an emergency stay, allowing Nevada to pursue a TRO against the company’s sports‑event contracts.
- Immediate impact: Kalshi is expected to suspend its Nevada operations for at least two weeks pending a preliminary‑injunction hearing.
- Legal front: The core dispute—whether federal CFTC authority pre‑empts Nevada gambling law—remains unresolved and will be addressed in the pending federal case.
- Industry implications: The ruling may embolden other states to file similar actions, potentially leading to a patchwork of state restrictions on prediction‑market platforms.
- Regulatory outlook: The case highlights the growing tension between emerging crypto‑related financial products and traditional gambling regulators, suggesting that clearer federal guidance may be needed to reconcile the two regimes.
Kalshi has indicated that it will continue to defend its business model in federal court while complying with the immediate Nevada order. The outcome of the forthcoming preliminary‑injunction hearing—and any subsequent appellate review—will be closely watched by the broader crypto‑derivatives community as a bellwether for the future regulatory landscape of prediction markets in the United States.
Source: https://cointelegraph.com/news/appeals-court-denies-kalshi-s-bid-to-stave-off-ban-in-nevada?utm_source=rss_feed&utm_medium=feed&utm_campaign=rss_partner_inbound
