Key Points
- Federal regulators filed a lawsuit against New Mexico, expanding their legal campaign against state-level prediction market restrictions
- Kalshi potentially faces contempt charges in Nevada after state investigators allegedly purchased contracts despite an existing injunction
- Nadex, operated by Crypto.com, initiated legal action against New York’s attorney general challenging state gambling enforcement
- Kentucky faces a lawsuit from the Coalition for Fair Markets over its 14.25% tax on prediction market transactions
- Federal authorities maintain that Congress granted exclusive regulatory power over event contracts to the CFTC
On June 12, 2026, the conflict over prediction market regulation intensified dramatically as multiple parties filed legal actions spanning four different states including New York, Kentucky, Nevada, and New Mexico.
These developments represent the most recent escalation in an intensifying clash between state-level gambling authorities and prediction market platforms operating under federal oversight.
Federal Agency Targets New Mexico
The Commodity Futures Trading Commission initiated legal proceedings against New Mexico following the state’s enforcement actions targeting Kalshi. The state has also seen tribal gaming stakeholders file their own legal challenge related to prediction markets.
Federal regulators contend that congressional legislation established their singular authority over event contracts conducted through federally supervised exchanges. According to the CFTC, New Mexico lacks jurisdiction to enforce its gambling statutes against these financial instruments.
With this action, New Mexico becomes the ninth state confronting litigation directly from the CFTC. The regulatory body has previously initiated lawsuits against Illinois, Arizona, Connecticut, New York, Wisconsin, Minnesota, and Rhode Island. Additionally, the agency has submitted amicus briefs supporting federal authority in disputes involving Massachusetts, Ohio, and Nevada.
Nevada Seeks Contempt Ruling Against Kalshi
Nevada’s Gaming Control Board petitioned a state court to find Kalshi in contempt of court. State authorities allege the platform violated an injunction issued on May 18 that prohibited the company from providing specific event contracts to individuals physically present within Nevada’s borders.
State investigators successfully completed purchases of prohibited contracts during a period spanning May 28 through June 1 while operating from locations within Nevada. The contracts in question involved NBA playoff competitions, Major League Baseball games, and professional tennis events.
According to Nevada officials, Kalshi’s geographic restriction technology has proven ineffective. The state requests that the court mandate profit forfeiture or impose daily monetary penalties until full compliance is achieved.
In an official statement, the Gaming Control Board emphasized that Kalshi had failed to honor the court’s directive. Under Nevada law, sports-event contracts constitute wagering activities subject to state regulation.
Nadex Launches Challenge Against New York
The North American Derivatives Exchange, which operates under Crypto.com ownership, filed legal action targeting New York Attorney General Letitia James along with the New York State Gaming Commission.
Nadex requests judicial confirmation that federal statutes supersede New York’s gambling regulations when those rules are applied to contracts executed on federally regulated exchanges.
The platform referenced ongoing New York litigation against Gemini and Coinbase as indicators that similar enforcement measures could target its operations. Nadex maintains that the CFTC possesses sole regulatory jurisdiction over its product offerings.
Industry Coalition Challenges Kentucky’s Tax Structure
The Coalition for Fair Markets, a newly formed industry organization, launched legal proceedings in Kentucky challenging the state’s recently enacted 14.25% tax on prediction market transaction fees. The coalition’s membership includes Kalshi, Nadex, and Polymarket US.
Kentucky imposes a comparatively lower 9.75% tax rate on wagers placed at horse racing facilities. The coalition contends that applying a higher tax rate to prediction markets constitutes violations of the dormant Commerce Clause, equal protection guarantees, and First Amendment protections.
The organization asserts that federal law preempts Kentucky’s regulatory measures. This coalition operates independently from the Coalition for Prediction Markets, which has previously characterized Polymarket as an “offshore” operation.
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