Kalshi Inc. litigation bounded between state and federal courts this week as prediction market litigation heats up over whether its sports prediction wager offerings are contracts subject to the sole regulation of the federal agency in charge of derivatives markets.
On Thursday that agency—the US Commodity Futures Trading Commission—was granted the ability to participate in oral arguments as amicus curiae at the US Court of Appeals for the Ninth Circuit in April on its claim that states encroach on the government’s turf when attempting to regulate sports prediction markets, according to the docket. The CFTC requested participation on March 3.
The Ninth Circuit’s grant allowing participation comes after a US District Court for the District of Nevada judge Wednesday quickly recalled a remand order she’d issued just two days earlier, saying she found good cause to consider prediction markets’ emergency motion for a stay pending appeal of her directive sending the enforcement action back to a Nevada court, according to a docket entry.
Judge Miranda M. Du on March 2 had said Nevada gaming regulators had showed state statutes under which it seeks relief don’t require interpretation of federal law, and that the federal act conferring jurisdiction upon the CFTC didn’t completely preempt the state’s claims. Du similarly recalled a remand order involving Polymarket.
Scenarios akin to the Silver State shuffling are playing out across the country as state and federal regulators vie for control of the burgeoning prediction market business that also counts among its participants Crypto.com,
Kalshi Thursday removed to the District Court for the Western District of Michigan a suit brought by the state’s Attorney General Dana Nessel. Polymarket and Robinhood sued Michigan Wednesday, the day after Nessel brought an enforcement action against Kalshi on behalf of Michigan residents and gaming regulators.
At the southern end of the US Court of Appeals for the Sixth Circuit’s jurisdiction, Judge Gregory F. Van Tatenhove remanded to Kentucky state court a lawsuit brought against Kalshi and Robinhood by company Kentucky Gambling Recovery LLC. Looking at whether the federal Commodity Exchange Act preempts state law, the District Court for the Eastern District of Kentucky judge said in a March 3 order, “This question is far from settled.”
“As we’ve previously shared, Robinhood’s event contracts are regulated by the CFTC and offered through Robinhood Derivatives, LLC, a CFTC-registered entity, allowing retail customers to access prediction markets in a safe, compliant, and regulated manner,” a Robinhood spokesperson said in an emailed statement. “We will continue to defend ourselves against these claims.”
Widespread Litigation
These developments are a window into widespread litigation between prediction markets and states, tribes, and others in state and federal courts nationwide.
States argue sports event contracts are glorified betting subject to their oversight. Prediction markets and the Trump administration’s CFTC say event contracts are “swaps” placed under the regulator’s exclusive jurisdiction after the 2008 financial crisis, preempting state regulation and making it the sole authority to oversee these derivative contracts on federally-regulated markets.
Milbank LLP is among Kalshi’s counsel. Cravath, Swaine & Moore LLP and Gibson, Dunn & Crutcher LLP is among Robinhood’s. Gibson Dunn is among Polymarket’s. State Attorney General
Kalshi, Polymarket, the CFTC, Kentucky Gambling Recovery’s attorneys, Ford’s office, and Nessel’s office didn’t respond to emails seeking comment. Nevada and Michigan’s gaming control boards declined to comment.
The case is Nevada v. KalshiEX, LLC, D. Nev., No. 2:26-cv-00406, 3/4/26, Nevada v. Blockratize, Inc., D. Nev., No. 3:26-cv-00089, 3/4/26, Nessel v. KalshiEX LLC, W.D. Mich., No. 1:26-cv-00731, removal notice 3/5/26, Kentucky Gambling Recovery LLC v. Kalshi Inc., E.D. Ky., No. 3:25-cv-00054, remanded 3/3/26, and N. Am. Derivatives Exch., Inc. v. Nevada, 9th Cir., No. 25-7187, 3/3/26.
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