Nevada regulators have filed a lawsuit against Kalshi, accusing the prediction market platform of operating an unlicensed sports gambling business in the state. The lawsuit, filed Tuesday by the Nevada Gaming Control Board and attorney general, alleges Kalshi violated state law by offering sports betting services without proper licenses and allowing users under 21 to participate.

This legal action follows a federal appeals court rejection of Kalshi's attempt to block Nevada's enforcement efforts. The case comes amid explosive growth in prediction markets, with Kalshi reporting 27 times more Super Bowl business this year compared to last. Nevada's regulated gambling operations saw reduced activity during the same period, highlighting the competitive threat these platforms pose to traditional betting.

The lawsuit exposes a growing regulatory battle between states and federal authorities over prediction markets. The Commodity Futures Trading Commission has asserted exclusive federal jurisdiction, with Chair Michael Selig arguing in a Wall Street Journal op-ed that states cannot prohibit these "exciting products." Meanwhile, Donald Trump Jr.'s financial ties to both Kalshi and rival Polymarket raise questions about potential conflicts of interest as federal regulators defend the industry.