The two separate verdicts put more pressure on regulators, and prediction markets are also under review for having unfair benefits and possible insider trading linked to event-driven contracts.
Two decisions by US federal courts have made it more likely that Nevada regulators will try to stop prediction-market trading in the state. This is because a judge sent a case between Polymarket’s parent company, Blockratize, and Kalshi back to state court in two consecutive decisions.
Nevada Remands Cases to State Jurisdiction
A federal judge ruled on Monday that the Commodity Exchange Act (CEA) and the Commodity Futures Trading Commission (CFTC) do not completely override state gaming rules for prediction markets.
The judge said that the CEA’s savings clause left some state power intact and that the corporations had not proven a reason to stop Nevada’s action at this time.
The judgement implies that the Nevada Gaming Control Board can keep going with its civil enforcement lawsuit in state court. There, it might ask for an injunction that would stop Nevada citizens from accessing event contracts offered by Polymarket or Kalshi.
Polymarket’s parent firm filed a move to ask for a short administrative stay of the court’s remand order in response to the ruling.
The motion is a legal request to stop a court decision or enforcement action that is seen as a temporary emergency measure.
Ongoing legal battles and enforcement actions
The Nevada ruling comes at a time when state regulators are putting more and more pressure on prediction markets. Kalshi has been suing Nevada’s gaming regulator since 2025.
A federal judge also sent Nevada’s civil enforcement action against Kalshi back to state court on Tuesday. This means that Kalshi could soon be hit with a “imminent temporary restraining order” that would stop it from offering event contracts in the state, according to a court filing seen by sports betting and gaming lawyer Daniel Wallach.
Wallach noted on Tuesday that “the ruling could encourage other states to sue Kalshi in state court and ask for injunctions to stop event contracts.” This technique has worked in every case so far.
After receiving instructions to halt all sports betting markets in the state, Kalshi sued the governor of Nevada in March 2025.
But in February, the US Court of Appeals for the Ninth Circuit turned down Kalshi’s request to halt Nevada’s casino regulator from acting on its sports event contracts.
Source: Daniel Wallach
Insider trading and market integrity concerns
As prediction markets face criticism for providing certain individuals with an edge and potential insider behaviour, the legal battle continues.
On Thursday, ZachXBT revealed the long-awaited investigation, which said that Broox Bauer and other Axiom employees had been involved in insider trading since early 2025.
In January, worries about insider trading came to light when a Polymarket account made $400,000 by betting that Venezuelan President Nicolás Maduro would be captured. The account placed the bet just hours before US forces caught him during a military operation.
Earlier this month, the Israeli government detained and charged two people with insider trading on Polymarket. They were said to have used secret knowledge about Israel attacking Iran to do this.