Nevada Court Rulings Put Polymarket and Kalshi at Risk of Trading Halt

Prediction markets let users trade event contracts tied to sports, elections, weather and other outcomes. The core legal dispute is whether those products are gambling subject to state control or derivatives governed by the federal Commodity Exchange Act. Minnesota became the first U.S. state to enact an outright ban, escalating a nationwide jurisdictional fight between state gaming authorities and the Commodity Futures Trading Commission, which says it has exclusive oversight of swaps listed by federally regulated exchanges including Kalshi and Polymarket US.

U.S. District Judge Katherine Menendez on July 27 issued a preliminary injunction blocking Minnesota’s law days before its Aug. 1 effective date. The measure would make operating or assisting a prediction market a felony. Menendez said the CFTC, Kalshi and Polymarket were likely to succeed in showing that the Commodity Exchange Act preempts the statute for many event contracts, while enforcement would cause irreparable harm. The order remains in place until a final ruling on the merits, giving the platforms and federal regulator an interim victory.

Polymarket lets users predict sports results through event contracts. At issue is whether such products should be regulated nationally by the U.S. Commodity Futures Trading Commission under federal derivatives law or treated by Michigan as gambling under state law. The jurisdictional question will determine whether individual states can restrict the platform and help define the operating boundaries of U.S. prediction markets.

A federal judge in Michigan ruled that Polymarket’s sports prediction contracts are not swaps under CFTC jurisdiction. The state may therefore continue regulating them under state law, and the judge rejected the platform’s effort to block enforcement. The conclusion conflicts with a Third Circuit Court of Appeals ruling involving Kalshi and could be appealed, potentially leaving the U.S. Supreme Court to resolve the issue.

Kalshi and Polymarket allow users to trade contracts tied to game outcomes, point spreads and player statistics. The dispute centers on whether these products are derivatives subject exclusively to oversight by the U.S. Commodity Futures Trading Commission, or must also comply with state gambling laws. Kentucky separately enacted legislation in April 2026 imposing a 14.25% tax on platform trading fees, above the 9.75% rate on racetrack wagers.

On June 17, 2026, Kentucky Attorney General Russell Coleman sued Kalshi, Polymarket and their partners Coinbase, Robinhood and Webull in Franklin Circuit Court, alleging that they offered sports betting without licenses and failed to provide support for problem gambling. The state described the two platforms as multibillion-dollar businesses. The case puts the Trump administration, which supports exclusive federal oversight, in direct conflict with a Republican-led state government.

Kalshi and Polymarket allow users to wager on political, military and sporting outcomes through event contracts. Such products are regulated by the U.S. Commodity Futures Trading Commission, but have raised fairness concerns because people with access to confidential information could profit from them. In January 2026, a trader made more than $409,000 by betting on political developments in Venezuela.

On March 23, 2026, Kalshi barred candidates from betting on their own elections and prohibited sports insiders from trading related contracts. Polymarket also banned people with confidential information or the ability to influence outcomes from placing bets. On May 22, the U.S. House Committee on Oversight and Government Reform launched an investigation, saying more than 80 Polymarket users were linked to suspicious trades, and ordered both platforms to provide KYC and monitoring data by June 5.

Prediction markets allow users to trade contracts on election, economic or sports outcomes. Operators including Kalshi and Polymarket argue that their products are derivatives regulated by the CFTC, while states view proposition wagers as gambling, creating a jurisdictional clash between federal commodities law and state gaming laws.

The Utah Legislature passed HB243 in 2026, classifying proposition wagers on event outcomes as illegal gambling and barring operators from offering sports-betting-like prediction services in the state. Governor Spencer Cox has said he will sign the bill, exposing Kalshi and Polymarket to the risk of being blocked and facing enforcement action.