KVIG Informative

Nevada spent months in court arguing that a prediction market app was really just illegal sports betting wearing a different name. A federal appeals court agreed — but the ruling that could send this fight to the Supreme Court doesn’t end it in Nevada yet.

The 9th U.S. Circuit Court of Appeals ruled in favor of Nevada’s gaming regulators this week, rejecting Kalshi’s argument that its sports event contracts were federally regulated financial instruments beyond the reach of state gambling law. The court stated in its opinion that the sports event contracts “were not ‘swaps’ because they were sports bets.”

Nevada Attorney General Aaron Ford called the ruling a major legal victory, saying Kalshi had sought to sidestep Nevada’s gaming laws by claiming its sports wagering products were federally regulated financial instruments beyond the reach of state regulators. Ford said the court made clear that sports betting doesn’t become something else simply because a company calls it an event contract.

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Gov. Joe Lombardo said prediction markets offering sports event contracts constitute gambling and must comply with Nevada’s gaming laws and regulatory framework, crediting Nevada Gaming Control Board Chairman Mike Dreitzer and the board for their work upholding the state’s regulatory standards.

Nevada was the first state to stop online prediction markets from operating within its borders, obtaining injunctions against Polymarket, Kalshi and Coinbase, according to the attorney general’s office. When Kalshi was caught violating that injunction and threatened with contempt of court, the company agreed to implement a third-party geofencing solution to identify and block Nevada users from entering prohibited contracts.

That geofencing agreement is now the subject of a separate, ongoing dispute. The Nevada Gaming Control Board has asked a Carson City court to impose $120,000 in daily fines against Kalshi, alleging state investigators were still able to purchase prohibited contracts from within Nevada weeks after the geofencing deadline passed. Kalshi has called that motion “ridiculous” and says its geofencing was functioning correctly.

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The 9th Circuit’s ruling came in an appeal of a U.S. District Court decision already favoring Nevada. Ford’s office has also been leading a multistate coalition, alongside Ohio’s attorney general, filing an amicus brief supporting New Jersey regulators in a related appeal — positioning the underlying legal question for a possible U.S. Supreme Court review.

Nevada has now won at the district court, won at the appeals court, and is still fighting over daily fines in a Carson City courtroom. Kalshi is appealing. Whether this ends at the Supreme Court or Nevada’s regulatory framework simply outlasts a company that keeps losing in front of federal judges is the only real question left.