Nevada is reportedly halting the operations of prediction market Kalshi within the state — at least for now.

Nevada filed a two-week temporary restraining order on Friday against Kalshi, according to Wired and gaming lawyer Daniel Wallach. In a court document posted by Wallach, the judge said that the "balance of hardships and public interest weighs in favor of issuing the temporary restraining order."

The dispute stems from a cease‑and‑desist order the Nevada Gaming Control Board issued to Kalshi last year, directing the platform to stop offering event‑based contracts in the state. Kalshi then filed a lawsuit against Nevada, arguing that it is federally regulated, which preempts states' regulators. 

However, on Thursday, the U.S. Court of Appeals for the Ninth Circuit denied Kalshi's earlier motion to stay the case. 

The restraining order marks the latest development in the ongoing broader legal battle between states and prediction markets. States, like Nevada and Tennessee, have brought cases against prediction markets centered around concerns about sports-event contracts. 

At the federal level, the Commodity Futures Trading Commission, led by Chair Michael Selig, has increasingly asserted its authority over prediction markets, in part by filing an amicus brief last month in a separate case. Selig has warned that his agency will continue to assert its jurisdiction. 

The CFTC has also released guidance outlining how exchanges should approach listing prediction market contracts, as the agency seeks to take jurisdiction over those markets. In that advisory, CFTC staff reminded exchanges that list event-based derivatives, often referred to as prediction-market contracts, must comply with the agency's existing rules under the Commodity Exchange Act. 

 In the court document posted by Wallach, the judge addressed the competing regulators, saying that "the question of federal preemption in this regard is nuanced and rapidly evolving."

State vs federal law regulations

Prediction market operators say that event contracts should be federally regulated, while states say the platforms are violating local gaming and gambling laws, particularly related to sports-related bets. 

At the federal level, lawmakers have also raised ethical concerns about contracts tied to violent events and concerns around insider trading.

In January, Democrat Rep. Ritchie Torres introduced a bill to set firm limits on how elected officials and other top officials engage with prediction markets after bets were made that former Venezuelan President Nicolás Maduro would be captured, sparking concerns of inside information.

Then last week, Democratic lawmakers introduced legislation dubbed the "Death Bets Act" that would ban prediction market contracts tied to death, war, or assassination.

Kalshi declined to comment on the temporary restraining order.