On February 19, 2026, Kalshi removed to federal court the lawsuit filed against it in state court by the state of Nevada.  This prevents the state judge from issuing a temporary restraining order (“TRO”), which would have prohibited Kalshi from taking bets/trades from the Silver State.

More than twenty states have filed legal actions against Kalshi.  The most important is Nevada, since it is always treated as the leader in deciding how the law should treat gambling.

Kalshi has good lawyers and an in with the Trump family – Donald Trump, Jr., is a paid strategic adviser to Kalshi.  Donald Trump, Sr., appointed Michael Selig, Kalshi’s lawyer, to be the Chairman and, in fact, the only member of the Commodity Futures Trading Commission (“CFTC”).

Law students learn that cases are decided by legal standards.  Lawyers know that cases are decided by who decides what those legal standards are.

What happens next?

The legal issues surrounding sports events prediction markets are complicated but come down to the question of whether Congress intended to allow what looks like sports betting to be treated as commodities trading.  

Early last year, a federal judge in Nevada ruled preliminarily in favor of Kalshi.  The judge decided not only that Kalshi’s market in predictions on sports events looks like commodities trading, but also that it is up to the CFTC to decide the issue.

Kalshi would obviously love to have the CFTC, meaning Michael Selig, decide whether its trades meet all the standards required of commodities contracts, and therefore to be exempt from all state anti-gambling laws.  The Nevada Gaming Control Board and Attorney General want Nevada state courts, which know gambling when they see it, to decide,

Kalshi filed suit in federal court to prevent Nevada from suing it in state court.  A federal judge ruled in favor of Nevada and issued a TRO against Kalshi.  Kalshi filed an emergency writ to the federal Ninth Circuit Court of Appeals.  On Wednesday that Court ruled Nevada could file suit in state court, which it immediately did.  

As a side note, one of the interesting state claims is that Kalshi allows 18-year-olds to make trades for money on future sports events, while the minimum age to gamble in Nevada is 21.

As I predicted in my last Blog, Kalshi removed the case to federal court.

Nevada will now ask the federal judge to remand the case back to state court.  This will probably take many weeks to decide.

If the case stays in federal court, Kalshi will either get the same temporary victory it won before in that Court or will get an order preventing the state courts from hearing the case until the CFTC decides.

If Kalshi loses and the federal judge orders the case to be remanded to state court, Kalshi will take another emergency writ to the Ninth Circuit, this time asking the Court of Appeals to order the federal trial Court to hear the case.  That will take more weeks.

If Kalshi loses in the Ninth Circuit it will seek an emergency stay from the US Supreme Court.

In fact, Kalshi will probably also seek an emergency writ to the SCOTUS to overturn the first Ninth Circuit decision, which had upheld the TRO allowing the state of Nevada to sue Kalshi in state court, in the first place.

I used to be a trial lawyer.  When I switched to teaching one of my courses for more than 20 years was Civil Procedure.

As an expert on gaming law, I think Kalshi’s futures contracts on sports events will, and should, be declared to be gambling.  But if Kalshi’s lawyers can’t figure out ways to delay a final decision to at least 2027, they should give me a call.