Key Points
- The Nevada Gaming Control Board has petitioned a state court to find Kalshi in contempt for failing to honor a judicial directive blocking in-state users
- Daily fines exceeding $120,000 are being requested by Nevada regulators for continued non-compliance
- The prediction platform relies on IP address detection to limit Nevada access, a method regulators dismiss as insufficient
- California has joined 37 other states in submitting a friend-of-the-court brief opposing Kalshi in Sixth Circuit litigation
- Political considerations surround both Nevada’s Aaron Ford and California’s Rob Bonta in their pursuit of the cases
Legal pressure is mounting against Kalshi as two major states accelerate enforcement actions through court proceedings and coordinated interstate advocacy.
Nevada Pushes for Contempt Ruling
The Nevada Gaming Control Board submitted a formal contempt motion on Friday to the First Judicial District Court, asserting that Kalshi has disregarded judicial mandates requiring the platform to prevent Nevada residents from accessing sports, entertainment, and political betting markets.
The initial judicial directive came down on April 3, with modifications issued on May 18. State regulators maintain that Kalshi has ignored both versions of the order.
State officials are pursuing financial sanctions of no less than $120,000 per day for as long as Kalshi continues its alleged non-compliance. This penalty amount appears explicitly in official court documents.
In response to the first order, Kalshi implemented an IP-based blocking system. Nevada authorities contend this measure falls short of requirements. Legal documents filed by the state characterize IP-based location detection as fundamentally unreliable, emphasizing that IP addresses are “notoriously” imprecise indicators of a user’s actual location.
Regulators are demanding geofencing technology instead—a widely adopted standard within the American gambling sector that restricts platform access based on jurisdictional boundaries rather than individual user tracking. Kalshi has opposed implementing geofencing, pointing to implementation expenses and federal regulations mandating platform availability to all US citizens.
Kalshi spokesperson Jacki McGavick stated the company has followed the court’s directive. She further noted that if any technical deficiency exists, the Gaming Control Board has not supplied the necessary details to address it.
California Enters Federal Court Battle
Coinciding with Nevada’s contempt filing, California Attorney General Rob Bonta revealed that his state had become part of a 37-state amicus coalition challenging Kalshi in federal litigation against Ohio. The US Court of Appeals for the Sixth Circuit is presiding over that matter.
This marks California’s seventh participation in multistate initiatives aimed at prediction market operators. The state previously contributed to a comparable brief in Kalshi’s Tennessee litigation just two weeks prior, which has subsequently been merged with the Ohio proceedings.
Bonta characterized the filing as defending state sovereignty over gambling oversight. He contended that prediction market companies should not exploit federal commodity trading statutes to circumvent state-level consumer safeguards.
California has not initiated independent legal action against Kalshi. However, three California gaming tribes filed suit against the platform last year under federal Indian Gaming Regulatory Act provisions, though they failed to secure a preliminary injunction. That appellate challenge remains pending before the Ninth Circuit.
Electoral Implications for State Attorneys General
Both chief legal officers have political motivations informing their aggressive stance. Nevada’s Aaron Ford recently secured the Democratic gubernatorial primary and is now challenging Republican Governor Joe Lombardo. Ford seeks to make history as Nevada’s first Black governor.
California’s Bonta is seeking another term and has consistently acted in ways that favor the state’s influential gaming tribes, whose California and northern Nevada casino operations produced $12.1 billion in gross gaming revenue during fiscal 2024.
Prediction market participants on Kalshi currently assign Ford a 59% probability of capturing the governorship this November. Polymarket users estimate the Democratic candidate’s chances at 52%.
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