Kalshi’s fragile truce with the Nevada Gaming Control Board (NGCB) may be over after the regulator accused the prediction platform of violating its agreement to stop its sports, election, and entertainment prediction contracts in the state. The NGCB now intends to fine Kalshi $120,000 for each day it refuses to comply, while the company denies violating any rules.
Kalshi Previously Complied With the NGCB’s Requirements
In July, Kalshi agreed to limit many of its offerings in Nevada after continued pressure from local regulators. The prediction platform implemented geofencing technology to prevent anyone located in the state from accessing prohibited contracts on its platform. However, Kalshi only conceded to this measure after an investigation found that it had failed to comply with a previous court injunction.
The NGCB warned Kalshi that the company would face a $120,000 daily fine if it failed to properly geofence its offerings in Nevada. However, board investigators now allege that they were able to place nine restricted trades while their devices were connected to Nevada cellular networks, potentially spelling trouble for Kalshi.
After negotiations with the state, Kalshi hired geolocation provider GeoComply to ensure compliance with Nevada regulations. The prediction platform insists it continuously informed the NGCB throughout the process and that the regulator approved the geofencing solution. While this should have resolved the dispute, the NGCB’s newest allegations have reignited tensions.
The Platform Insists That It Did Nothing Wrong
Kalshi has firmly denied the NGCB’s accusations and accused investigators of using false residence information during their tests. The company claimed that such underhanded actions violated federal law. Rick Heaslip, Kalshi’s chief regulatory officer, was adamant that the platform had fully complied with the NGCB’s requirements and accused the authority of abusing its position to defend casino interests.
Kalshi went above and beyond to geofence Nevada as requested. We hired a state-approved vendor and updated Nevada every step of the way.
Rick Heaslip, Kalshi chief regulatory officer and general counsel
This evolving dispute reflects the growing tensions between prediction markets and state regulators. Platforms like Kalshi and Polymarket insist that their offerings constitute financial instruments and are thus regulated on the federal level by the Commodity Futures Trading Commission (CFTC). Meanwhile, states insist that these platforms offer contracts that are often indistinguishable from sports bets, requiring intervention by local regulators.
With neither Kalshi nor the NGCB seemingly willing to back down, it remains unclear whether either side will escalate the issue. The regulator could petition the court to enforce the $120,000 daily fine. Meanwhile, Kalshi could turn to the CFTC, which has often intervened to shield prediction platforms from state scrutiny, even resorting to legal action.