A U.S. federal judge ruled on Monday, March 3rd, that Nevada regulators may pursue civil enforcement actions against event-based cryptocurrency contract platforms, Polymarket and Kalshi.
If successful, the regulatory actions could limit Nevadans’ ability to participate in event-based cryptocurrency contracts. This increases regulatory pressure on prediction markets operating in the US.
The decision rejected the argument that federal regulation via the Commodity Exchange Act (CEA) and the Commodity Futures Trading Commission (CFTC) supersedes Nevada gaming laws. As a result, the case has been remanded to the Nevada State Court.
Nevada regulators could obtain a Temporary Restraining Order (“TRO”) or Preliminary Injunction. Hence, Polymarket and Kalshi’s ability to provide event contracts to Nevadans may be limited or eliminated.
Federal Preemption Claim Denied
Polymarket filed a motion requesting a brief administrative stay of the remand order with the U.S. District Court of Nevada. According to court filings, this motion requests a stay of enforcement pending appeal.
However, the documents filed in the court showed that the “savings clause” of the CEA does not entirely eliminate the regulatory power of the states. In addition to the case against Polymarket, a separate case against Kalshi has also been remanded back to the state court.
Source: Courtlistener.com
Gaming Attorney Daniel Wallach posted on X that Kalshi now faces the potential of an “immediate temporary restraining order.” This would prevent Kalshi from offering event contracts in Nevada.
Mr. Wallach also stated that this decision may encourage other states to issue similar orders.
Also Read | Kalshi Reports Two Insider Trading Cases as Platform Activity Surges
A Greater Scrutiny On Prediction Markets
Besides facing increased regulatory scrutiny, there are also growing cases of information advantages and alleged insider trading activities in the prediction market. A recently reported example of alleged insider trading includes a suspected insider wallet that netted over $1.2 million.
The trader bet on the outcome of blockchain investigator ZachXBT’s exposé into Axiom. Earlier this year, two Israelis were indicted by Israeli authorities for allegedly using advanced knowledge of Iranian military actions to make trades on Polymarket.
These cases have increased regulatory awareness of event contracts linked to geopolitical events or investigative findings. Prior to these recent developments, Kalshi had sued Nevada in March 2025 after receiving a cease-and-desist letter regarding its sports-related markets.
However, in February 2026, the Ninth Circuit Court of Appeals denied Kalshi’s attempt to enjoin Nevada from enforcing its claims.
Why This is Important
If Nevada is able to secure restrictions, other states may follow suit. Therefore, this may significantly reshape the way in which prediction markets operate throughout the United States.
Also Read | Suspected Insider Profits $1 Million from Polymarket After U.S. Strikes on Iran