Nevada officials want a federal judge to send their lawsuit against KalshiEX, LLC back where it started, in state court.
In an emergency motion filed Wednesday (February 18) in the U.S. District Court for the District of Nevada, the State of Nevada, acting through the Nevada Gaming Control Board, asked Chief U.S. District Judge Andrew P. Gordon to remand the case after Kalshi removed it from state court.
Nevada first sued under its own gaming laws, accusing Kalshi of running what regulators describe as unlicensed sports betting within the state. According to the motion, “The Board brought this civil enforcement action under Nevada gaming law to enjoin Defendant KalshiEX LLC (Kalshi) from offering unlicensed sports betting in Nevada.”
State regulators argue the stakes go well beyond a paperwork dispute. They contend the alleged activity is causing continuing damage. Quoting earlier court findings, the motion states that “every day that Kalshi offers gambling in violation of Nevada law causes ‘substantial irreparable harms to the Board, the State of Nevada, the gaming industry in this state, and the public interest.’” The filing points to KalshiEX, LLC v. Hendrick and references a recent state court order in Nevada v. Blockratize, Inc., which involved a temporary restraining order connected to Polymarket.
As previously reported by ReadWrite, a federal appeals court recently declined to block Nevada regulators from proceeding against Kalshi over its event-based contracts. The court’s decision did not resolve the actual dispute between Kalshi and federal regulators but instead lifted a temporary procedural barrier, clearing the way for Nevada to pursue enforcement under state law. Nevada argues that even if Kalshi’s contracts are subject to federal oversight by the Commodity Futures Trading Commission (CFTC), that oversight does not preempt the state’s authority to regulate and police gambling activity within its borders.
Federal jurisdiction at the center of issue between Nevada and Kalshi
Nevada argues that the case does not belong in federal court, despite CFTC Chair Mike Selig saying otherwise. Simply pointing to a federal statute, the state says, is not enough to justify removing a case from state court. “In other words,” the state writes, “a federal statute must not only override state law, but also give plaintiffs a federal claim they can use in its place—one that lets them seek relief for the same alleged harm, just in federal court under federal law instead of under state law.”
The state emphasizes how rarely that standard is met. “Unsurprisingly, given the extraordinary showing required, ‘[c]omplete preemption is rare.’” It continues, “Indeed, the Supreme Court has ‘identified only three statutes that meet this criteria’—§ 301 of the LMRA, § 502 of ERISA, and §§ 85–86 of the National Bank Act.”
If the judge agrees with the state, the case could be sent back to Nevada court as soon as next week, returning the fight over Kalshi’s operations to the venue where it began.
Featured image: Kalshi / Canva
The post Nevada presses federal judge to return Kalshi case to state court appeared first on ReadWrite.
