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The case against prediction market operator Kalshi has sent back to Nevada’s First Judicial District Court after a federal judge ruled that the matter belongs under state law.
In a March 2 order, U.S. District Judge Miranda M. Du granted the Nevada Gaming Control Board’s request to remand, rejecting Kalshi’s argument that federal jurisdiction applied. By doing so, the judge cleared the way for state regulators to pursue an injunction against the company.
The Gaming Control Board alleges that Kalshi has been running operations without a Nevada gaming license, a violation it says harms both the state and the public on a daily basis. With the case now returned to Carson City, regulators will continue pressing their claims in state court, where penalties could include a halt to trading activity and further enforcement measures.
The story so far
The clash between Nevada regulators and Kalshi began in March 2025, when the Gaming Control Board ordered the company to stop taking wagers from people in the state without a license.
Kalshi refused to comply and instead went to the federal court, asking for an injunction to block enforcement. Chief Judge Andrew Gordon initially granted that request but later lifted it, ruling that Kalshi was unlikely to succeed on the merits.
Kalshi appealed to the Ninth Circuit, arguing the lower court was wrong to dissolve the injunction. While the appeal moved forward, the company asked the district court to pause the case entirely.
Judge Gordon agreed only in part, leaving the Board free to file a civil enforcement action in state court on February 17. Kalshi quickly removed that case to federal court, claiming it involved federal law under the Commodity Exchange Act.
Judge Miranda Du rejected that argument, finding the claims rest on Nevada’s licensing rules, not federal authorization. With that decision, the case was sent back to Carson City, where state regulators will continue pressing their claims.
CEA does not “Completely Displace” state law, court says
Kalshi argued that the Commodity Exchange Act should override state authority and give federal courts exclusive jurisdiction over its trading platform. Judge Miranda Du rejected that claim, noting that complete preemption is rare and requires clear intent from Congress. She found no such intent in the CEA.
Instead, she pointed to a savings clause that explicitly preserves the jurisdiction of both federal and state courts, meaning state law remains in play even when the CFTC regulates certain markets.
The company also claimed the case was defective because the CFTC was not named as a party, suggesting that its inclusion could trigger federal officer removal. Judge Du dismissed that argument as well, explaining that Nevada’s lawsuit targets Kalshi alone under state law and does not expose the CFTC to liability.
With both theories rejected, the court concluded there was no valid basis to keep the case in federal court, sending it back to Nevada’s judicial system.
Source: Gambling Insider
