Trump Administration Supports Kalshi and Polymarket as Nevada Moves to Enforce Ban
The growing legal conflict over prediction markets in the United States is intensifying after federal regulators aligned with the Trump administration stepped in to support industry operators Kalshi and Polymarket, as Nevada moves forward with enforcement action to close parts of their businesses.
The dispute raises a broader question facing courts and regulators: whether prediction markets are financial products governed by federal law or a form of online gambling subject to federal regulation.
The latest development came after the US Court of Appeals for the Ninth Circuit rejected Kalshi’s request to halt enforcement action by Nevada regulators. Hours after the decision, the Nevada Gaming Control Board filed a lawsuit seeking to block the stadium from awarding contracts for sports-related events to state residents.
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Nevada Pushes to Crack Down on Gambling
Nevada regulators argue that Kalshi’s event contracts, which allow users to trade outcomes such as sports results, operate in the same way as regular sports betting and therefore require a state gaming license.
Officials say the company offers illegal bets that violate Nevada gaming laws and undermine the state’s tightly regulated betting market.
The lawsuit seeks an injunction that would compel Kalshi to suspend its operations in the area while the lawsuit is pending. The state has taken similar action against other platforms, reflecting a broader effort by many jurisdictions to restrict speculative markets they view as gambling products.
Kalshi disputes that with the characters, maintaining that his contracts stem from finance, not betting. The company operates as a federally regulated business and has moved to have the case transferred to federal court, arguing that state laws preempt federal oversight.
Federal Regulators Join the Fight
At the center of the dispute is the Commodity Futures Trading Commission (CFTC), which, under Chairman Michael Selig, has taken an active step in protecting futures markets. The agency filed an amicus brief supporting the federal authority, arguing that states cannot reclassify federally regulated derivatives trading as illegal gambling.
The Trump administration’s support of Kalshi and Polymarket reflects a broader policy shift toward treating prediction markets as part of the financial system rather than the gambling industry. Federal officials argue that allowing individual countries to impose restrictions would create disparate regulations and undermine national derivatives markets.
Prediction platforms allow participants to buy contracts priced between 1 and 99 cents based on the probability of real-world events occurring. While the markets include political, economic, and weather results, sports-related contracts have a large trading value.
What’s Next in Prediction Markets
The legal dispute is ongoing in many courts and could ultimately determine who controls the speculation markets across the country. States, including Massachusetts, Tennessee, and others, have issued lawsuits or cease-and-desist orders, while operators continue to fight for federal protections.
Nevada’s enforcement action increases immediate pressure on Kalshi, although appeals, including a possible emergency appeal to the US Supreme Court, are still possible.
The result could reshape the way Americans participate in event-based trading and define the boundary between financial speculation and online gambling for years to come.
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