Digital Wager Wire highlights the most significant events affecting the domestic and international sports betting and gaming industries each week throughout the year.
Nevada Argues Kalshi’s Geofencing Agreement Violated
The Nevada Gaming Control Board (NGCB) is attempting to punish Kalshi in state court for purportedly breaching a preliminary injunction that prevents the prediction market from offering certain event contracts to Nevada residents.
It seemed like both sides were headed toward a geofencing solution, but the August 12 deadline for Kalshi to implement preliminary geofencing controls has come and gone. Nevada regulators say Kalshi’s location controls didn’t meet the court’s requirements by the deadline and the prediction market leader should be forced to pay a $120,000-a-day fine for each day it stays out of compliance.
According to reports, NGCB investigators were able to physically access Kalshi from Nevada and purchase contracts that regulators say were prohibited. These included markets on NBA playoff games, MLB games, boxing, tennis, and even a celebrity wedding.
“People located within 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,” the Nevada Gaming Control Board counsel wrote.
Kalshi initially would block accounts based on the addresses they were registered to, but later added its own location detection system that leaned heavily on IP addresses, Nevada said. But regulators say that’s not enough because the data can be inaccurate and doesn’t always reflect where a person is physically located. The NGCB also states that those controls can be circumvented.
Fenced In
The NGCB says Kalshi should adopt commercial geolocation technology, like the systems used by regulated U.S. sportsbooks, to determine whether customers are physically located within a jurisdiction.
Kalshi agreed to implement geofencing by August 12th, and the company would have to pay Nevada $120,000 a day until it meets the deadline under the agreement. But Kalshi also reserved the right to file a sworn statement explaining why it was unable to make the necessary changes. Nevada now requests the court to find Kalshi in contempt, impose sanctions for each day of alleged noncompliance, and order the company to pay the NGCB’s legal costs and attorneys’ fees.
Kalshi disagrees, saying it’s done enough to remain in compliance with the injunction while the underlying legal battle plays out. The dispute stems from a preliminary injunction in April that barred Kalshi from selling or facilitating certain event contracts, many of them sports contracts, in Nevada. The court later clarified that the restriction included people physically in-state, not just customers with Nevada addresses.
“Kalshi has acted in complete good faith and has fully complied with the spirit and letter of the court’s order by onboarding the state’s own gold standard vendor, GeoComply,” responded Kalshi general counsel Rick Heaslip.
“This enforcement action is a vindictive waste of taxpayer dollars at the bidding of casinos,” he added.
The case now heads to Carson City District Court, where a judge will hear evidence from both sides on whether Kalshi is in contempt of the order or if they have done enough to avoid the onerous financial penalties.
