The Nevada Gaming Control Board has asked a state court judge to hold Kalshi in contempt of court, alleging that the prediction market platform is still allowing event contract trading within the state.
In a First Judicial District Court of Carson City filing on June 12, the NGCB claims that the company “continues to flagrantly violate” a court order to geofence its site that was included as part of a preliminary injunction granted to the board.
“Kalshi simply is not complying with the court’s preliminary injunction order,” wrote the NGCB. “People located in Nevada are easily able to go to Kalshi’s platform and purchase Kalshi’s sports-, election-, and entertainment-related contracts. The board’s investigators have confirmed it over and over again, including several more times since the board filed its application [for an ex parte order].”
Nevada judge: ‘No doubt’ Kalshi offers sports wagering
Carson City District Judge Jason Woodbury awarded the NGCB a temporary restraining order (TRO) against Kalshi in March to block the company from offering certain event contracts. That order required the prediction market to stop offering sports, election, and entertainment-related contracts in Nevada for 14 days.
Woodbury subsequently granted the board’s request for a preliminary injunction in late April and ordered Kalshi to implement goefencing controls and block Nevada access to its platform by May 4.
In that ruling, Woodbury wrote that there could be “no doubt that what Kalshi has been offering in its market is a form of sports wagering.”
NGCB says Kalshi cheaped out on its fencing
Kalshi has argued in the lengthy case that installing the kind of geofencing sought by Nevada would be prohibitively expensive. The company has come under scrutiny since the ruling, with some social media users suggesting they were still able to make trades on the platform.
In its filing on Friday, the Nevada board stated that Kalshi’s own court filings show that the firm “has spent only a small amount of money ($190,000)” on a system that uses internet protocol (IP) addresses as a basis for geoblocking. In the NGCB’s words, that’s despite the operator previously testifying in court documents that an IP-only solution would not be sufficient to restrict access in Nevada.
“Accurate commercial geofencing solutions are readily available, but Kalshi refuses to use them here, contending that its homegrown solution is good enough,” added the regulator.
The NCGB went on to note numerous instances in which it said its investigators were able to purchase event contracts on Kalshi from within Nevada’s borders, including eight occasions between May 28 and June 1 and another 12 purchases made June 8-11.
“In each instance, Kalshi’s platform accepted and recorded the trades without blocking, restricting, or otherwise preventing the transactions based on the investigators’ Nevada location … The fact that the board’s investigators repeatedly were able to purchase covered event contracts demonstrates that Kalshi is systematically violating the court’s order.”
Kalshi accuses Nevada regulators of ‘PR stunt’
Asked for comment by SBC Americas, Kalshi directly and flatly denied the NGCB’s claims and accused the board of conducting “a PR stunt”.
“We’ve complied with the Court’s order,” a spokesperson told SBC Americas on Monday. “If the NGCB had a genuine concern regarding a technological flaw in our system, they would have given us the information we need to fix it, yet they haven’t.
“We’ll always work constructively with regulators, but this seems like a PR stunt, and so we’re seeking sanctions and an apology for wasting the court’s time.”
Nevada counts its successes
The NGCB stated in a June 12 press release announcing the latest court filing that it has taken action in recent months to halt the operations of other prediction markets in the state and “has successfully restricted the operation of all unlicensed prediction markets that had been known to be operating in Nevada”.
Other prediction market platforms have purported to ban event contract trading in Nevada after similar court orders, including:
- Coinbase
- Crypto.com
- Polymarket
The NGCB has now asked the Carson City court to hold Kalshi in contempt and impose sanctions for its alleged noncompliance.
Failing that, it urged the court to summon representatives for the firm for a hearing and demand that the company show cause why it should not be held in contempt.
