CoinDesk
Kalshi and the broader prediction-market industry absorbed a series of state-level legal blows this week while drawing firmer federal support from the CFTC, leaving the central question of regulatory jurisdiction unresolved across multiple courts.
The platform lost a Nevada Supreme Court bid to lift a state geofencing requirement blocking Nevada users from much of its trading activity, with three justices saying they were "not persuaded." Days later, a Michigan court granted state gaming regulators a two-week restraining order halting Kalshi from offering or advertising sports-event contracts there. Michigan Gaming Control Board Executive Director Henry Williams accused the firm of "targeting Michigan's most vulnerable residents with sports betting dressed up as investing."
Why it matters
The legal fight is no longer about a single state. Kalshi is now active in Nevada, Michigan, Minnesota, Ohio, and New Jersey courts simultaneously, while the CFTC under pro-innovation Chairman Mike Selig has filed parallel suits arguing event contracts fall under federal derivatives jurisdiction similar to agricultural hedges. The contradiction between federal backing and state resistance turns the case into a near-existential test for the sector, since event contracts were Kalshi's wedge into a multibillion-dollar sports-betting market dominated by state-licensed sportsbooks.
The next moves to watch are the Minnesota hearing, Kalshi's Ohio suit against the state gaming regulator, and New Jersey's request for more time in its appeal process before the U.S. Supreme Court. Justice Samuel Alito granted a deadline extension to Aug. 4, 2026, meaning the highest court may eventually decide whether the Commodity Exchange Act preempts state gambling law.
Market impact
The legal pressure is already reshaping revenue economics in at least one state. North Carolina is close to finalizing a budget bill that would impose a 6% tax on prediction-market revenue while hiking the rate on traditional sportsbooks, formally drawing a fiscal line between the two products.
Frequently asked questions
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What is the current legal status of Kalshi in US states?
Kalshi is fighting active legal battles in at least five states. It lost an emergency motion in the Nevada Supreme Court and faces a two-week restraining order in Michigan, while hearings proceed in Minnesota and Ohio and a Supreme Court appeal moves forward from New Jersey.
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Is the CFTC backing Kalshi against state regulators?
Yes. The CFTC under Chairman Mike Selig has filed parallel suits arguing that event contracts fall under federal derivatives jurisdiction, similar to agricultural hedges, and has argued against state attempts to regulate prediction markets as gambling.
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Why are state regulators suing Kalshi?
State gaming regulators argue that Kalshi's sports-event contracts are unlicensed sports betting. Nevada, Michigan, New Jersey, and others have moved to block or geofence the platform, with Michigan's regulator accusing Kalshi of targeting vulnerable residents with "sports betting dressed up as investing."
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Could the US Supreme Court decide the Kalshi case?
Possibly. New Jersey has appealed a Third Circuit ruling favoring Kalshi to the Supreme Court, and Justice Samuel Alito granted an extension to Aug. 4, 2026 for the state to file its petition, putting the high court's eventual intervention in play.
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How are US states taxing prediction markets?
North Carolina is close to finalizing a budget bill that would impose a 6% tax on prediction-market revenue while raising the tax on traditional sportsbooks. New Jersey is pursuing a parallel regime as part of its broader jurisdictional fight with Kalshi.
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