A Nevada judge has temporarily blocked Kalshi from operating in the state, finding that state authorities are reasonably likely to prevail in a legal fight over whether the company’s event contracts violate Nevada gambling laws.

Carson City District Court Judge Jason Woodbury issued a temporary restraining order on Friday, siding with a Nevada Gaming Control Board motion to block Kalshi from operating in the state for 14 days.

"Prediction markets, to ​the extent they facilitate unlicensed gambling, are illegal in Nevada, and we have a statutory duty to protect the public," Nevada Gaming Control Board Chair Mike Dreitzer said in a statement to Reuters.

Kalshi did not immediately respond to a request for comment.

The court’s decision comes after a federal appeals court on Thursday denied an emergency request by Kalshi to stay a federal court proceeding, allowing Nevada’s regulators to take action.

Nevada bars sports, election and entertainment event contracts

In his order, Judge Woodbury wrote that Kalshi was banned from offering sports, election and entertainment-related event contracts in Nevada.

He added that, in the record of the early stages of the case, such contracts are considered a “sports pool” under Nevada law, which Kalshi was not licensed to operate.

Source: Daniel Wallach

The Nevada Gaming Control Board sued Kalshi last month, asserting the company needed to be licensed by the state in order to offer its sports event contracts.

Kalshi argued that its contracts are under the exclusive jurisdiction of the Commodity Futures Trading Commission, an agency that has backed prediction markets that are fighting in multiple state courts over accusations of offering illegal gambling.

“The question of federal preemption in this regard is nuanced and rapidly evolving,” Judge Woodbury wrote in his motion, rejecting Kalshi’s argument. “At the moment, the balance of convincing legal authority weighs against federal preemption in this context.”

Judge Woodbury scheduled a hearing on April 3 to consider a motion for preliminary injunction against Kalshi.

Kalshi is being sued, or has launched its own legal action, against multiple states that have accused the prediction market of operating without a state license.

A Massachusetts state judge banned Kalshi from offering sports event contracts earlier this year, which was lifted after Kalshi appealed the decision.

On Tuesday, Arizona filed criminal charges against Kalshi, with the state’s Attorney General Kris Mayes alleging Kalshi is “running an illegal gambling operation,” which Kalshi CEO Tarek Mansour called a "total overstep.”