A federal judge has remanded lawsuits against prediction markets Kalshi and Polymarket back to Nevada state court, ruling that the Commodity Exchange Act does not completely preempt state gaming law claims. This allows the Nevada Gaming Control Board to seek injunctions that could temporarily ban these platforms from offering event contracts in the state. Legal analysts warn the rulings could embolden other states to pursue similar actions, creating regulatory challenges for the prediction market industry, which saw trading volume rise to $63.5 billion in 2025.
A federal judge remanded the dispute between Nevada regulators and prediction market Kalshi back to state court on Monday, a move flagged by legal analyst Daniel Wallach. The court found that the Commodity Exchange Act does not completely preempt Nevada’s gaming law claims.
This decision allows the Nevada Gaming Control Board to seek an injunction that could temporarily bar Kalshi from offering event contracts in the state. Kalshi is weighing an emergency appeal, while Polymarket has sought a stay in a similar case.
Legal analyst Daniel Wallach stated, “While not unexpected, the remand order is still a significant setback for Kalshi because it puts the company one step closer to being pushed out of the Nevada market.” He added that this could have a domino effect, making it harder for Kalshi to argue against geofencing in other states.
In a parallel ruling, the federal court also sent Nevada’s case against Blockratize, Polymarket‘s parent company, back to state court. The court rejected Polymarket‘s bid to move the case to federal court, as filed by the company.
Kalshi may file an emergency application to the U.S. Supreme Court to seek a stay, with any request going to Justice Elena Kagan. Wallach explained that without expedition from the Ninth Circuit, it might be a tough ask.
The rulings could embolden other states to sue Kalshi in state court and seek injunctions, a strategy that has so far succeeded in every case. Wallach warned, “States may soon begin to pursue this strategy with greater frequency.”
Prediction markets have seen rapid growth, with total trading volume rising to about $63.5 billion in 2025, up roughly fourfold from the previous year. A 2024 federal ruling established that event contracts aren’t inherently gambling under federal law but did not preempt state authority.
Former Interim CFTC Chair Caroline Pham said at a panel discussion that this raises a constitutional question over federal and state authority. She stated, “I 100% think it’s going to go to the Supreme Court,” describing it as a 10th Amendment clash.
