Two US federal court rulings have increased the risk that Nevada regulators may seek to halt prediction-market trading in the state after a judge sent a dispute involving Polymarket’s parent company Blockratize and Kalshi back to state court in two separate rulings.
A federal judge rejected arguments that US regulation under the Commodity Exchange Act (CEA) and the Commodity Futures Trading Commission (CFTC) fully preempts state gaming laws for prediction markets, according to a Monday order.
The judge found that the CEA’s savings clause does not completely displace state authority and that the companies had not shown a basis to block Nevada’s action at this stage.
The decision means the Nevada Gaming Control Board can continue pursuing its civil enforcement case in state court, where it could seek an injunction restricting Nevada residents from accessing event contracts offered by Polymarket or Kalshi.
Court filing in the case of Nevada vs. prediction markets. Source: Courtlistener.com
In response to the ruling, Polymarket’s parent company submitted a motion to request a brief administrative stay of the court’s remand order, the filing shows.
The motion is a legal request seeking to freeze a court ruling or enforcement action seen as a short-term emergency measure.
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Prediction markets face mounting pressure after Nevada ruling: Lawyer
The Nevada decision comes as prediction markets face mounting pressure from state regulators, including Kalshi, which has been fighting Nevada’s gaming regulator since 2025.
On Tuesday, a federal judge also remanded Nevada’s civil enforcement action against Kalshi back to state court, exposing Kalshi to an “imminent temporary restraining order” barring it from offering event contracts in the state, according to a court filing seen by sports betting and gaming-focused lawyer Daniel Wallach.
“The ruling could embolden other states to sue Kalshi in state court and seek injunctions to block event contracts, a strategy that has so far succeeded in every case brought,” wrote Wallach, in a Tuesday X post.
Source: Daniel Wallach
Kalshi sued the state of Nevada in March 2025 after receiving a cease-and-desist order to halt all sports-related betting markets within the state.
However, in February, the US Court of Appeals for the Ninth Circuit denied Kalshi’s bid to stop Nevada’s gaming regulator from taking action on its sports event contracts.
Related: ‘Elite’ traders hunt dopamine-seeking retail on prediction markets: 10x Research
Insider trading concerns add to scrutiny
The legal fight is unfolding as prediction markets draw scrutiny over information advantage and potential insider activity.
Suspected insider wallets netted $1.2 million by betting on the outcome of blockchain sleuth ZachXBT’s investigation into Axiom, Cointelegraph reported on Friday.
ZachXBT released the much-anticipated investigation on Thursday, alleging that Axiom employee Broox Bauer and others had been responsible for insider trading activity since early 2025.
Top wallets betting on Axiom in ZachXBT’s insider exposé. Source: Dune
Insider trading concerns were first highlighted in January after a Polymarket account profited $400,000 after it placed a bet on a contract predicting that Venezuelan President Nicholas Maduro would be captured, wagering the funds just hours before US forces captured him during a military operation.
Earlier in February, Israeli authorities arrested and indicted two people suspected of using secret information related to Israel striking Iran for insider trading on Polymarket.
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