Nevada’s legal campaign against prediction market operator Kalshi has taken another contentious step, with state lawyers demanding access to a wide array of internal records and communications. At issue is whether Kalshi’s sports event contracts fall under federal commodities law—shielded by the Commodity Futures Trading Commission—or whether they are, in Nevada’s view, unlicensed gambling activities. The dispute now pivots on the discovery process, with the outcome poised to reshape how prediction markets operate across the United States and clarify the boundary between federal regulation and state control.

Nevada Demands Extensive Discovery

Attorneys representing the state of Nevada have filed a motion in the US District Court for the District of Nevada, pressing for broad discovery against Kalshi, the prediction market platform valued at more than $2 billion following a June funding round.

The state insists on accessing documents that shed light on how Kalshi conceives, structures, and manages its event-based contracts. Nevada is particularly interested in whether the firm’s sports event markets—contracts that allow traders to speculate on the outcomes of games—run afoul of the state’s stringent gaming laws.

The demand extends well beyond operations. Lawyers seek records on Kalshi’s dealings with the Commodity Futures Trading Commission (CFTC), particularly communications involving commissioners and chair nominee Brian Quintenz. Nevada also wants clarity on Kalshi’s ties to institutional market makers such as Susquehanna International Group, as well as details of the company’s engagement with lobbyists and marketing consultants in Nevada.

Kalshi Pushes Back on Fact-Finding

Kalshi has argued that discovery is a distraction, contending the dispute rests solely on legal interpretation—namely, whether federal law preempts Nevada gaming statutes. From Kalshi’s standpoint, the facts are largely uncontested, with the real question being jurisdictional: does the Commodity Exchange Act, and by extension the CFTC, hold exclusive authority over its contracts?

Nevada’s response challenges this framing. State lawyers assert that many of Kalshi’s claims, including the argument that excluding Nevada would jeopardize the company’s long-term survival, cannot be adequately tested without access to internal operational and financial data. They accuse Kalshi of trying to fast-track a ruling—submitting affirmative evidence while simultaneously attempting to block Nevada’s ability to uncover countervailing facts.

The state further dismissed Kalshi’s claim that discovery would prove excessively burdensome, pointing to the company’s multibillion-dollar valuation as evidence of its ability to comply.

A Clash Between Federal Oversight and State Authority

The tug-of-war sits at the convergence of two spheres of regulatory power: the CFTC’s oversight of commodities and derivatives versus Nevada’s entrenched authority over gambling within its borders.

The requested materials include:

• All sports-related contracts available to Nevada residents,
• Records of compliance efforts with Nevada gaming laws,
• Correspondence with Susquehanna International Group and other liquidity providers,
• Analyses of Kalshi’s economic and market impact.

The legal confrontation first erupted in March, when the Nevada Gaming Control Board issued a cease-and-desist letter accusing Kalshi of operating as an unlicensed sportsbook and of dabbling in election-based contracts that state regulators consider impermissible gambling activities.

Kalshi countered in federal court, asserting that as a CFTC-regulated exchange, it is not subject to state gaming laws. In April, the company secured a temporary injunction allowing it to continue operations in Nevada pending final resolution—a move that underscored the high financial stakes surrounding its platform.

Nevada’s Legal Position

Nevada has been crystal clear that it considers its police powers over gaming non-negotiable. State regulators argue that nothing in federal law strips Nevada of its right to control gambling within state borders. Indeed, the state’s filings emphasize that while the CFTC may govern trading on commodity markets, it does not nullify Nevada’s long-standing authority to dictate who may or may not operate gaming activities locally.

This stance, if upheld, would mean that fintech platforms like Kalshi could not simply bypass state laws by appealing to federal oversight. Instead, they would have to navigate a dual-layered compliance environment, subject to state licensing requirements as much as federal regulation.

Potential Precedent and Investor Implications

The implications of this case go well beyond Nevada. Should the court side with the state, prediction markets may need to recalibrate their expansion strategies, acknowledging state gambling authorities as gatekeepers even when they are federally regulated. A ruling for Kalshi, on the other hand, could embolden the rise of event-based markets nationwide, granting CFTC-regulated platforms broad latitude to introduce innovative products without fear of state intervention.

For investors, the stakes are equally significant. A favorable ruling for Kalshi could unlock substantial new revenue streams, supporting its lofty valuation and encouraging additional venture capital inflows into the sector. Conversely, a restrictive ruling could slow momentum, raise compliance costs, and limit opportunities within key markets like Nevada—a state synonymous with gaming.

As of now, the court has not ruled on whether Nevada will receive the discovery it demands or whether Kalshi’s motion for a swift decision will prevail. The outcome promises to shape the broader future of prediction markets in America.

Key Takeaways for Market Watchers

• The Nevada vs. Kalshi case is not just about one company—it may determine whether state regulators or federal agencies hold the ultimate authority over prediction markets.
• If the state succeeds, prediction markets may need to adopt state-level licensing frameworks similar to traditional sportsbooks.
• If Kalshi wins, event-driven financial contracts could see broader adoption, potentially setting the stage for an entirely new class of legally sanctioned derivatives.
• Investors should track this litigation closely, as the ruling will have a direct impact on the business models and valuations of emerging prediction platforms.

Until the courts clarify the tension between state gaming law and federal commodities regulation, firms like Kalshi will remain in regulatory limbo, navigating uncertain waters as they seek to legitimize a market designed around betting on real-world outcomes.

Region: United StatesCompany: KalshiGeneral: Online Casinos

Illegal, borderless, and aggressively marketed, unlicensed online gambling operators continue to eat into the fast-expanding iGaming industry—forecast to reach $618.7 billion worldwide by the end of 2025. Their rise presents an enforcement nightmare, as they exploit gaps in national regulations, encrypted payments, and global online platforms. Against this backdrop, the Ukrainian Gambling Council (UGC) is urging for a unified, technologically driven international framework to curb these operations. From Europe to Asia, countries are experimenting with enforcement measures, but Ukrainian regulators argue that only cross-border cooperation will ensure long-term success in dismantling illicit gambling networks.

Crypto and Social Platforms Power the Surge of Unregulated Gambling

Viktoriya Zakrevskaya, the Deputy Chair of the Ukrainian Gambling Council, highlights two catalysts fueling the rapid growth of unlicensed operators: cryptocurrency transactions and relentless promotion on social media platforms. These operators use offshore registrations, anonymous payments, and algorithm-driven targeting campaigns to quickly scale their customer base, often beyond the reach of regulatory authorities.

According to industry projections, unregulated entities already account for a substantial percentage of the $618.7 billion iGaming market. Their anonymity and operational agility give them an edge, undermining licensed operators who comply with taxation and player protection rules. The global threat, in Zakrevskaya’s view, cannot be resolved by fragmented national measures—it demands a strategically integrated, tech-enabled response.

International Solutions: Local Models, Global Implications

Different nations have already pioneered solutions that blend regulation, financial oversight, and civic involvement. For instance:

Argentina has deployed strict age-verification technology combined with measures that bar access to blacklisted betting sites through public Wi-Fi networks. This dual system has made illicit platforms less accessible, especially for underaged users and other vulnerable groups.

Indonesia, one of the most heavily restricted gambling markets, has opted to monitor the financial infrastructure feeding illegal gambling ecosystems. In 2023 alone, regulators froze 26,000 bank and e-wallet accounts linked to unlawful betting operations, illustrating how surveillance of monetary flows can choke unregulated markets at their source.

Zakrevskaya underscores these examples as proof that innovative enforcement, supported by advanced technology, can yield tangible results. However, isolated national interventions remain insufficient against a borderless digital industry.

The US: Fragmentation Fuels Illicit Growth

The United States presents a particularly complicated case. A patchwork of state-level gambling regulations has created fertile ground for illegal websites to thrive. Recent estimates suggest that unlawful betting operators are expanding nearly twice as fast as their licensed competitors, with over 80% of consumers reporting exposure to ads from unregulated operators.

Efforts are underway to close loopholes by tightening oversight of digital payments and pressuring major technology companies to strengthen content controls surrounding gambling promotions. But the issues reveal a larger systemic weakness: fragmented regulatory structures amplify the risk of consumer exploitation and deprive governments of significant tax revenues.

Ukraine’s Fight Against Illegal Gambling: A National Security Angle

Ukraine has made the battle against unlawful iGaming operations a central component of its regulatory and national-security strategy. Its newly established regulatory body, PlayCity, has assumed oversight responsibilities following the dissolution of KRAIL, and it has taken an assertive approach:

Partnering with global tech giants such as Meta to block social media accounts tied to illicit gambling promotion.

Enforcing blocks on more than 100 unlicensed platforms, with allegations that some operators are funneling their revenues into Russian war financing.

For Kyiv, this fight is not just about protecting consumers—it represents a strategic effort to cut illicit funding streams that may indirectly support Moscow’s war machine. In this sense, illegal gambling has become intertwined with geopolitical concerns, elevating it from a mere regulatory problem to a matter of international security and stability.

Building Transparency Through Real-Time Monitoring

Looking beyond immediate enforcement, the Ukrainian Ministry of Digital Transformation is designing a real-time monitoring system that will record betting activity, impose automatic taxation on profits, and provide regulators with transparent data. This technologically advanced framework is intended to:

Boost government revenues from gambling taxation.

Enhance public confidence in licensed markets.

Reduce space for manipulation by operators who exploit existing reporting gaps.

Such a system, once operational, could serve as a global blueprint for balancing regulation, revenue generation, and consumer protection in the digital betting age.

A Call for Global Cooperation

Zakrevskaya’s overarching message is clear: the fight against unlicensed gambling cannot be won piecemeal. Collaboration across jurisdictions, real-time data-sharing, and cross-industry partnerships are fundamental. By merging regulatory authority with cutting-edge technology, governments can create a safer online gambling environment that protects consumers, restores market integrity, and curtails criminal activity.

For investors and policymakers, the key takeaway is that the future growth of the legitimate iGaming industry depends on regulatory innovation matched with international solidarity. Markets that manage to strike this balance will not only reduce systemic risks but also command greater trust among players, financial institutions, and governments alike.

Region: UkraineGeneral: Online Casinos