- ▸ Judge grants preliminary injunction forcing Kalshi to halt election, sports, and entertainment contracts for Nevada residents.
- ▸ Kalshi must restrict access by then, but “Nevada residents” (account vs. physical location) remains unclear.
- ▸ A fast ruling from the Ninth Circuit could override the order before the deadline; longer-term fight likely headed for higher courts.
A state judge in Nevada has ordered Kalshi to stop allowing Nevada residents to trade event contracts related to outcomes of elections, entertainment, and sporting events. The court granted the Nevada Gaming Control Board’s request for the preliminary injunction on Tuesday.
Kalshi now has until May 4 to put the necessary controls in place to block Nevadans’ access to the offending markets, barring intervention from higher state or federal courts. That intervention could come before the Nevada state court’s deadline hits.
Kalshi faces May 4 deadline to interrupt Nevada residents’ market access
The April 28 injunction comes from Judge Jason D. Woodbury, who presides on the bench for the First Judicial District Court in Nevada. The Nevada Gaming Control Board’s (NGCB) request for the injunctive relief had been pending since March 12.
The order encompasses trading on contracts related to entertainment, which it clarifies as markets listed within Kalshi’s “culture” section, plus elections and sports. Kalshi “offering or facilitating the offering of” trading these markets by Nevada residents represents a violation of the order.
In the text, there are two key aspects that bear further inspection. Those are the preliminary nature of this injunction and the phrase “users identified as Nevada residents.”
Injunction is not permanent ban on prediction market trading in Nevada
This request from the NGCB, in theory, only stands until the district court considers the NGCB’s claims against Kalshi on the merits of the case. Even if the court finds for the NGCB and sanctions Kalshi, those restrictions would replace the preliminary injunction.
The potential for appeals exists. Kalshi can appeal Woodbury’s decision to grant the NGCB’s request for a preliminary injunction to the Nevada Court of Appeals, and perhaps to the Nevada Supreme Court.
However, the question of whether that will represent an expedited timeline for Kalshi becomes relevant. At this time, counsel for Kalshi may also seek clarity as to what the court means by “users identified as Nevada residents.”
How Kalshi might navigate exempting Nevada residents from contract trading
There are several ways to read “users identified as Nevada residents.” One is users who have self-identified as Nevadans by providing a Nevada address during account registration.
However, if that is the standard, then people who didn’t provide such an address at account registration but are nonetheless physically within Nevada’s borders would technically not fall within the purview of the order.
Another reading suggests that physical location, not account registration details, are the pertinent determinant. The distinction is critical because of the importance of tourism to Nevada’s economy.
Kalshi may seek further clarification from Woodbury as to how to comply with his order if it stands. The real issue for Kalshi, though, is whether the United States Ninth Circuit Court of Appeals will deliver it counterinjunctive relief before the May 4 deadline.
Ninth Circuit may make Woodbury’s order moot
The Ninth heard oral arguments on an appeal of the federal court for the district of Nevada’s decision to deny Kalshi injunctive relief against Nevada officials on April 16. At the conclusion of that hearing, the members of the panel of judges were noncommittal to any particular result but stressed that they would “issue an opinion as quickly as we can.”
A reversal of the lower court’s decision could nullify Woodbury’s order and leave Kalshi free to continue to offer contract trading in Nevada regardless of residency. That will depend on the exact language of such a decision from the Ninth.
During that hearing, counsel for Kalshi expressed the need for urgency due to the then-pending status of Woodbury’s ruling on the NGCB’s request for a preliminary injunction. That is now material, which may motivate the Ninth panel to render a decision before the May 4 deadline that Woodbury imposed.
Should the Ninth panel uphold the district court’s decision, Kalshi could request an en banc review from the entire Ninth or supplicate the US Supreme Court. At this time, though, the speediest path to relief for Kalshi is a favorable ruling from the Ninth panel.
For Nevadans who trade on prediction markets at Kalshi, this situation can change quickly and the timing of decisions from various courts matters. Everyone interested in this matter will be watching for developments out of the Ninth from now until May 4, as well as beyond.
