Prediction Markets Face State-Level Crackdown Across U.S.

Prediction market platforms Polymarket and Kalshi face an escalating wave of state regulatory actions across the United States. Nevada, Massachusetts, Connecticut, and Tennessee have all moved against these platforms in recent months.

A Nevada state court issued a temporary restraining order on Saturday blocking Blockratize, the entity behind Polymarket, from offering event-based contracts. Judge Jason Woodbury sided with the Nevada Gaming Control Board in the ruling.

BREAKING: Nevada state court issues temporary restraining order against Polymarket over offering of event contracts, says that the CEA does not vest exclusive jurisdiction in the CFTC. TRO will remain in effect for 14 days; hearing on the PI motion scheduled for 2/11. pic.twitter.com/p1tRk38EMD

— Daniel Wallach (@WALLACHLEGAL) January 30, 2026

The order blocks Polymarket from offering sports and events contracts to Nevada residents ahead of a February 11 hearing. The crackdown threatens a business segment representing over 80% of some platforms’ trading volumes.

The judge ruled that the Commodity Exchange Act does not grant exclusive federal jurisdiction over Polymarket’s contracts. This finding undermines a key legal defense prediction market platforms have relied upon to operate nationwide.

Nevada Court Cites Prediction Market Harm from Unlicensed Operations

The Nevada Gaming Control Board filed civil enforcement action seeking to stop Polymarket from offering unlicensed wagering through its mobile app. State authorities consider the platform’s activities sports wagering under Nevada statutes.

Judge Woodbury emphasized the harm caused by unlicensed operators evading Nevada’s comprehensive regulatory structure. He noted that platforms beyond state control obstruct authorities from preventing underage gambling.

The balance of hardships and public interest in maintaining meaningful control over Nevada’s gaming industry strongly supports issuance of the temporary restraining order

the judge wrote.

Daniel Wallach, founder of Wallach Legal LLC, posted on X that Polymarket appears to have already ceased offering event contracts in Nevada.

If these state-level enforcement actions are upheld, platforms like Polymarket and Kalshi may face difficult choices. They could be forced to obtain state-by-state gambling licenses or abandon sports-related markets entirely.

The current patchwork of state regulations creates significant operational challenges for prediction market operators. Chandra said the government needs to provide clearer guidelines for the industry.

Massachusetts and Connecticut Join Enforcement Wave

Massachusetts Superior Court Justice Christopher Barry-Smith ruled Tuesday that the state will prohibit Kalshi from offering sports-related event contracts. The judge cited the company’s lack of required licensing under the Sports Wagering Law.

State authorities must propose injunction terms by Wednesday. Kalshi has until Friday to respond. The court will issue the halt order by week’s end.

Massachusetts Attorney General filed a lawsuit against Kalshi in September. The complaint accused the platform’s binary contracts of violating state sports-betting laws.

Meanwhile, Connecticut’s Department of Consumer Protection issued cease-and-desist orders on December 4, 2025. The orders targeted Kalshi, Robinhood, and Crypto.com for operating unlicensed sports wagering services.

✍️ LATEST: CONNECTICUT ISSUES CEASE-AND-DESIST ORDERS TO ROBINHOOD, https://t.co/UkJzV1FKCK, AND KALSHI, ALLEGING THEIR EVENT CONTRACTS CONSTITUTE UNLICENSED SPORTS BETTING. pic.twitter.com/iG0oGu5cqH

— Coinwaft (@coinwaft) December 4, 2025

Earlier in January 2026, Tennessee’s Sports Wagering Council sent cease-and-desist letters to Polymarket, Kalshi, and Crypto.com. The letters ordered companies to immediately pull sports-related markets accessible to Tennessee customers.

Following these state actions, federal lawmakers have also taken notice. Rep. Ritchie Torres and 30 House colleagues recently introduced the Public Integrity in Financial Prediction Markets Act of 2026.

Former House Speaker Nancy Pelosi is among the co-sponsors. The bill would stop federal officials from participating in prediction markets under certain conditions.

The February 11 Nevada hearing on a preliminary injunction will provide further clarity on how courts view state gaming laws versus federal derivatives oversight.