KALSHIEX, LLC v. Hendrick
2:25-cv-00575
D. Nev.Jun 3, 2025Background
- KalshiEX, LLC (“Kalshi”) sued the Nevada Gaming Commission (NGC), Nevada Gaming Control Board (NGCB), their members in their official capacities, and Nevada’s Attorney General, to stop the enforcement of state gambling laws against its federally regulated event contracts.
- Kalshi argued that its contracts are lawful under federal law, and that federal law (the Commodity Exchange Act, or CEA) preempts Nevada’s gaming regulations in this context.
- A preliminary injunction had previously been granted to Kalshi, barring state enforcement pending litigation.
- Defendants moved to dismiss on multiple grounds, including Eleventh Amendment immunity, improper service, failure to state a claim, and lack of subject-matter jurisdiction.
- The court’s decision addresses whether state sovereign immunity was waived, the necessity of naming the “State of Nevada,” sufficiency of service, scope of immunity for state officials, plausibility of Kalshi’s claims, and arguments about preemption and the Tenth Amendment.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Eleventh Amendment Immunity | NGC and NGCB waived immunity by seeking affirmative injunctive relief | State did not waive immunity, only defended or sought to restore status quo | Waived by seeking court’s affirmative relief; motion to dismiss denied |
| Naming the State | Not necessary, or can amend; suing agencies suffice | Must name State of Nevada to invoke statutory waiver | Failure to name does not void suit; can amend, motion denied |
| Service of Process | Service on counsel suffices for all defendants including AG | NVAG not properly served; counsel only for some defendants | Counsel’s acceptance sufficed; all served; motion denied |
| State Law Immunity | State cannot immunize officials from injunctive federal claims | State law immunizes officials under NRS 41.032 | Ex parte Young exception applies; motion denied |
| Failure to State a Claim | Sufficient allegations re: official duties to implement relief | No facts showing personal unconstitutional actions by members | Claims plausible; officials proper parties; motion denied |
| Preemption (CEA) | CEA preempts Nevada’s gaming laws for federally permitted contracts | CEA does not preempt state gaming laws | Kalshi plausibly alleged preemption; more briefing needed |
| Tenth Amendment | Congress can validly preempt under Commerce Clause | Preemption would violate state police power; anti-commandeering | No Tenth Amendment violation; anti-commandeering not implicated |
| Judicial Estoppel | Prior statements don’t prevent current preemption claim | Kalshi should be estopped from calling contracts “not gaming” | Motion denied; can raise in future briefing |
Key Cases Cited
- Lapides v. Bd. of Regents of Univ. Sys. of Ga., 535 U.S. 613 (removal of state case to federal court constitutes waiver of Eleventh Amendment immunity)
- Ex parte Young, 209 U.S. 123 (permits suits against state officials for prospective injunctive relief to stop ongoing violations of federal law)
- Pennhurst State Sch. & Hosp. v. Halderman, 465 U.S. 89 (state waiver of Eleventh Amendment immunity must be unequivocal)
- Green v. Mansour, 474 U.S. 64 (clarifies Ex parte Young exception for prospective relief against state officials)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (standard for plausibility of pleadings)