U.S. District Judge Andrew P. Gordon in Las Vegas issued a 29-page ruling that dissolves a preliminary injunction he had previously granted to Kalshi Inc. in April 2025.
This decision allows the Nevada Gaming Control Board (NGCB) to enforce its March 2025 cease-and-desist order against Kalshi, effectively requiring the prediction market platform to stop offering sports-related event contracts to Nevada residents—at least temporarily, pending any appeal.
Kalshi operates as a federally regulated Designated Contract Market (DCM) under the Commodity Futures Trading Commission (CFTC). It offers binary “yes/no” prediction contracts on real-world events, including sports outcomes (e.g., “Will Team X win the Super Bowl?”).
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Kalshi argues these are financial “swaps” exempt from state gambling laws due to federal preemption under the Commodity Exchange Act (CEA). The NGCB views these contracts as unregulated sports betting, circumventing state licensing requirements and harming the local gaming industry, which generates billions in tax revenue.
Nevada is among nearly two dozen states and tribal authorities suing to block such platforms. In April, Judge Gordon granted Kalshi a preliminary injunction, allowing operations to continue in Nevada while the case proceeded.
However, in October 2025, he denied a similar request from competitor Crypto.com, ruling that sports outcome contracts do not qualify as CFTC-regulated swaps. Judge Gordon reversed his earlier decision, finding that Kalshi’s interpretation of the CEA is “strained” and would “upset decades of federalism regarding gaming regulation.”
He emphasized that sports contracts do not fall under the CFTC’s exclusive jurisdiction, as they resemble traditional gambling rather than financial derivatives. The judge weighed the potential economic damage to Nevada’s regulated gaming sector like casinos shifting to unregulated models against Kalshi’s temporary losses, concluding the state’s interests prevail.
The ruling also denies protection to Robinhood, which distributes Kalshi contracts; it must now block Nevada users to avoid liability. The NGCB has reissued warnings to its licensees and stated it will “vigorously oppose” any stay pending appeal while pursuing further court action.
Kalshi has indicated it will appeal to the Ninth Circuit Court of Appeals and is seeking a stay to maintain operations during the process. A company spokesperson highlighted Kalshi’s status as a “regulated, nationwide exchange” distinct from state sportsbooks, arguing the ruling could set a precedent threatening federal oversight of prediction markets.
This decision adds to a patchwork of conflicting federal rulings on prediction markets, potentially leading to state-by-state restrictions. For context, Crypto.com already ceased sports contracts in Nevada following its October loss.
The Commodity Exchange Act (CEA), codified at 7 U.S.C. § 1 et seq., is the federal statute that governs futures, options, and swaps on commodities in the United States. The CEA is administered and enforced primarily by the Commodity Futures Trading Commission (CFTC).“
CEA preemption” refers to the extent to which the CEA displaces or overrides state law especially state gambling/betting laws when a product is regulated by the CFTC as a futures contract, option, or swap.
If the CFTC has approved or registered a contract as a futures contract or swap on a CFTC-regulated exchange a Designated Contract Market or DCM, or a Swap Execution Facility, states cannot impose their own licensing, registration, or regulatory requirements on those exact contracts.
This is why traditional futures on corn, oil, gold, S&P 500, etc., are completely immune from state gambling laws — no state can say “trading corn futures is illegal gambling in our state.” Congress was worried that clever people would try to list binary “event contracts” that look exactly like gambling and then claim CEA preemption.
So Dodd-Frank added an explicit exception:“If a contract is a contract of sale of a commodity for future delivery or option thereon that involves gaming … the exclusive jurisdiction … shall not preempt any State gaming or bucket shop law.”
If the CFTC itself decides a contract is “gaming”, then the normal preemption shield disappears, and states can regulate or prohibit it under their gambling laws.The CFTC has formal rulemaking authority to decide case-by-case or by rule whether a particular event contract is “gaming” and therefore not entitled to preemption.
After Dodd-Frank, most swaps were brought under CFTC jurisdiction with their own broad preemption language: States are generally barred from imposing bucket-shop, gambling, or wagering laws on CFTC-regulated swaps.
However, the CFTC and courts still ask: Is this really a “swap” within the statutory definition? See 7 U.S.C. § 1a(47) for the very broad definition of “swap.. Are sports outcome contracts “swaps” or “futures”? Yes — they are financially settled binary contracts on an event; they fit the CEA definition of “swap.”
They are not true hedging or price-discovery instruments; they are functionally identical to sports wagers. Courts increasingly say they do not qualify as swaps entitled to preemption. Does the CFTC’s approval give automatic preemption? Yes — once listed on a DCM Kalshi is a CFTC-registered DCM, § 2(a)(1)(A) exclusive jurisdiction kicks in.
Only if the contract is not “gaming.” Sports contracts fall under the § 7a-2(c)(5)(C) gaming exception. Most recent federal courts agree the gaming carve-out applies; CFTC approval does not automatically preempt state law for sports.
Can states still ban them even if the CFTC lists them? No — that would destroy exclusive jurisdiction. Yes — because of the explicit gaming carve-out added by Congress in 2010. Election contracts, Oscar winner contracts, etc.? mixed results; some courts have allowed preemption, others have not.
Sports outcome contracts ? the clear emerging rule from multiple federal district courts D. Nev., D.D.C., N.D. Cal. is that they are not entitled to CEA preemption because they fall under the “gaming” carve-out. States can regulate or ban them even if the CFTC has allowed a platform to list them.
Kalshi and other prediction-market companies are now appealing these rulings to the Circuit courts especially the Ninth and D.C. Circuits, so the final word may come in 2026 or later. Until then, sports contracts on Kalshi, Robinhood, etc., are effectively illegal in Nevada and a growing list of other states.