The U.S. District Court for the District of Nevada recently denied the State of Nevada's motion for a preliminary injunction against prediction market operator KalshiEX, LLC. In an order issued on March 12, 2026, Judge Miranda M. Du not only rejected Nevada's request to halt Kalshi's operations but also remanded the entire case, State of Nevada v. KalshiEX, LLC (Case No. 2:26-cv-00406-MMD-BNW), back to the First Judicial Court of Nevada in Carson City. This decision signifies that the federal court has declined jurisdiction over the matter, sending the legal battle back to the state level for further proceedings.

Read our Prediction Market Report 2026 here.

Nevada's Legal Challenge

The State of Nevada, through its Gaming Control Board, initiated this federal lawsuit against KalshiEX, LLC, alleging that the platform's event contracts constitute unlicensed gaming under state law. Nevada sought a preliminary injunction to immediately prevent Kalshi from offering its event contracts, particularly those related to sports and elections, within the state's borders. The state's position has consistently been that such contracts fall under its jurisdiction to regulate gaming, requiring state licensing.

Federal Court's Ruling and Remand

In her March 12, 2026 order, Judge Du denied Nevada's motion for a preliminary injunction. Crucially, the court also determined that it no longer had jurisdiction over the action and ordered the case to be remanded to the state court. This means that while the federal court did not grant Nevada the immediate relief it sought, it also did not rule on the merits of whether Kalshi's contracts are indeed illegal gaming under Nevada law. Instead, the federal court effectively passed the responsibility for adjudicating the dispute back to the state judicial system.

Broader Context of Kalshi's Nevada Legal Battles

This development occurs amidst a complex and ongoing legal struggle between Kalshi and the State of Nevada. In a separate but related case, KalshiEX, LLC v. Hendrick (Case No. 2:25-cv-00575-APG-BNW), Kalshi had initially secured a preliminary injunction against Nevada's enforcement actions in April 2025. However, the U.S. District Court for the District of Nevada later dissolved that injunction in November 2025, finding that Kalshi was unlikely to succeed on its argument that federal law preempts state gaming regulations. Kalshi appealed this dissolution to the Ninth Circuit Court of Appeals, which, in August 2026, affirmed the district court's decision regarding sports-related event contracts, effectively blocking Kalshi from offering them in Nevada. The Ninth Circuit remanded the question of election contracts back to the lower court for further consideration.

What to Watch

With the federal court remanding State of Nevada v. KalshiEX, LLC, the immediate focus shifts to the First Judicial Court of Nevada in Carson City. The state court will now be tasked with addressing Nevada's allegations that Kalshi's event contracts constitute unlicensed gaming. This ongoing litigation highlights the persistent tension between state gaming regulations and the federal oversight of designated contract markets like Kalshi. The outcome of this state-level proceeding will be closely watched by the prediction market industry, as it could set precedents for how other states approach the regulation of event contracts. Further filings and hearings in the state court are expected as the legal process continues.

Original announcement: U.S. District Court for the District of Nevada