Court Ruling Raises Risk of Nevada Trading Halt for Kalshi, Polymarket
Decrypt
by Vince DioquinoMarch 3, 2026
AI-Generated Deep Dive Summary
A federal judge has sent Nevada’s cases against cryptocurrency prediction market platforms Kalshi and Polymarket back to state court, potentially allowing regulators to seek temporary injunctions that could halt their operations in the state. This ruling undermines Kalshi's argument that federal jurisdiction under the Commodity Exchange Act (CEA) preempts state gaming laws, with the court determining that Nevada’s claims "arise under state law" and are not completely displaced by federal regulations.
The decision marks a significant setback for Kalshi, as it brings the company closer to facing a restraining order in Nevada. If Nevada secures injunctive relief, Kalshi could be barred from offering event contracts to users in the state during ongoing litigation. This ruling could also embolden other states to pursue similar legal strategies against prediction market platforms, potentially forcing them to geofence or even exit certain markets.
Polymarket’s parent company, Blockrize, has also been sent back to state court, with the judge rejecting arguments that federal jurisdiction applies due to self-certified contracts under CFTC regulations. Polymarket is now seeking an emergency stay to delay remand while it prepares its appeal. Meanwhile, Kalshi may consider an emergency application to the U.S. Supreme Court for a temporary stay of the ruling.
This legal development highlights the growing tension between federal and state authority over cryptocurrency-related activities, particularly in emerging sectors like prediction markets. With total trading volume in this space reaching $63.5 billion in 2025—a significant increase from the previous year—the stakes for platforms like Kalshi and Polymarket are high.
The court’s decision underscores the vulnerability of crypto platforms to state-level legal challenges, even when they operate under federal regulatory frameworks. As states increasingly assert their authority over cryptocurrency businesses, prediction market operators may face a wave of similar lawsuits seeking to restrict or eliminate their operations within specific regions. This could have a domino effect, making it harder for these companies to argue against injunctions in other jurisdictions.
Verticals
cryptoweb3
Originally published on Decrypt on 3/3/2026