Kalshi has agreed to completely halt its operations in Nevada after acknowledging that users in the state were still able to access its event contracts, despite a previous court order mandating geoblocking.
The Nevada Gaming Control Board (NGCB) announced last week that their agreement with Kalshi will require the prediction market platform to cease offering sports and event contracts within Nevada by August 12 at the latest. This will involve implementing a geoblock solution from GeoComply.
According to a stipulation in Carson City court, failure to “definitively stop” operations in Nevada would result in a penalty of $120,000 per day for Kalshi until full compliance is achieved, or they must provide a valid explanation for the inability to implement the required geofencing measures.
The First Judicial District Court in Carson City had previously issued a preliminary injunction against Kalshi. Despite this, NGCB investigators were able to access and trade on the company’s markets as recently as June. The NGCB indicated that Kalshi was “flagrantly violating” the court's injunction. They also reported that Kalshi had spent approximately $190,000 on a self-developed geofencing system based on internet protocol (IP) addresses, which the NGCB contended was inadequate to meet the requirements of the court order.
A spokesperson from Kalshi claimed that their initial geofencing measures were in compliance with the court's instructions, but the company has now agreed to adopt a more effective, multi-source geofencing solution provided by GeoComply. This technology is commonly used by licensed sportsbooks across the U.S. to adhere to state regulations.
In a court filing on July 23, Kalshi admitted that NGCB investigators could indeed trade on event contracts from within Nevada, thereby breaching the court's previous order. However, the company did not acknowledge that these actions warranted a contempt ruling.
NGCB Chairman Mike Dreitzer stated that the new agreement will “ensure that Kalshi fully complies with Nevada law moving forward, or it will face stiff penalties.” This accord has also led to the cancellation of a contempt hearing that was planned for this week.
Kalshi has faced similar issues in other states; for instance, a court in Michigan mandated geoblocking measures with associated financial penalties. There, Kalshi was ordered to void and refund existing trades while also barring future event contract activities. However, the Commodity Futures Trading Commission (CFTC) instructed Kalshi to disregard the Michigan court’s order, creating a conflicting situation for the company.
The stipulation regarding Nevada also specifies that the agreement remains unaffected by any proceedings or findings in other states, including Michigan.
