Kalshi is experiencing a challenging week. On Tuesday, Arizona’s attorney general submitted a 20-count criminal complaint against the online prediction marketplace, alleging it operates an illegal gambling enterprise. Now, another southwestern state has taken significant action against the company: A Nevada judge has temporarily prohibited the service from functioning there due to an ongoing court case initiated by state regulators.

In February, Nevada, with the support of its Gaming Control Board, initiated legal action against Kalshi in efforts to prevent the prediction site from functioning. Officials assert that Kalshi has not obtained the necessary gaming licenses corresponding to the type of betting activities its users participate in and that allowing users under the age of 21 to access its services contravenes state law.

Earlier this month, the state sought a temporary restraining order against Kalshi as part of its continuing case. In a state court on Friday, Judge Jason D. Woodbury granted the state’s request and set a hearing for the restraining order for early next month, according to court documents.

In his ruling, Woodbury indicated that Kalshi lacked licensing under the Nevada Gaming Control Act and that, given Kalshi’s practice of taking a commission from contracts acquired through its system, it was evidently engaging in a “percentage game” (which the state classifies as gambling).

Kalshi contends that its registration with the Commodity Futures Trading Commission places it under that federal agency’s exclusive oversight, which they believe should shield it from state regulations, as stated in court documents. However, Woodbury pointed out that the question of whether federal law supersedes state law remains unresolved for the time being, though the courts have not shown a tendency in that direction.

Kalshi did not provide a comment on the situation when approached by TechCrunch. Wired was the first to report on the judge’s ruling. According to Reuters, Nevada had previously persuaded judges to impose bans on Kalshi’s competitors, such as Coinbase and Polymarket.

The Nevada litigation involving the prediction market is just one among a growing number of state cases nationally that argue that platforms such as Kalshi and Polymarket are illegal operations that evade state gambling regulations.

In contrast, current federal officials have taken on the role of advocates for the prediction industry. A prime example: Following Arizona’s decision to file criminal charges against Kalshi earlier this week, the CFTC’s chairman, Mike Selig, publicly criticized the decision, stating online: “The Arizona Attorney General today filed criminal charges against one of our registered exchanges pertaining to prediction markets. This is a jurisdictional conflict and utterly unsuitable as a criminal prosecution. The @CFTC is monitoring this closely and assessing its options.”

The increasingly adversarial stance of state officials combined with the leniency from the CFTC has essentially assured a regulatory conflict between states and the federal government regarding prediction markets and their future.