Kalshi has accused Nevada Gaming Control Board investigators of breaking federal law while testing whether the prediction market had complied with a court-ordered geofence. The accusation came after Nevada asked a state court to impose penalties of $120,000 per day, alleging that investigators were still able to place prohibited trades from inside the state after an Aug. 12 compliance deadline.
Nevada investigators placed nine trades through Kalshi’s mobile app on Aug. 13 while using standard iPhones connected to AT&T cellular networks in the state, according to the regulator’s filing. The contracts covered sports, elections, and entertainment, categories Kalshi had been ordered to stop offering to people physically located in Nevada.
Kalshi lawyer Andrew Porter disputed the regulator’s version of events in an Aug. 14 letter, saying the company had a functioning GeoComply system in place by the deadline. Kalshi claims investigators misrepresented their residences when creating or operating their accounts and that at least one investigator deliberately bypassed restrictions after being blocked from trading. The company said those actions violated federal law, although its public statements did not identify the specific federal provision it believes was breached.
Kalshi General Counsel Rick Heaslip went further, accusing Nevada of trying to manufacture another enforcement case against the company. He said Kalshi had hired GeoComply, a Nevada-licensed geolocation provider requested by regulators, and had kept the state informed during implementation. Heaslip called the investigation a “vindictive waste of taxpayer dollars at the bidding of casinos.”
The Nevada Gaming Control Board rejected the accusations as “baseless” and said Kalshi had simply missed the deadline it agreed to. The regulator said repeated failures to comply with court orders forced it to return to court, rather than any effort to target the company on behalf of licensed casinos.
Kalshi agreed in July to deploy a “robust, multi-source geofencing solution” supplied by a third-party provider after months of litigation with Nevada. The agreement set Aug. 12 as the deadline and established a $120,000 daily penalty if Kalshi failed to comply. GeoComply was subsequently selected to provide the technology.
Nevada says the problem was concentrated on Kalshi’s mobile app. The company told regulators on Aug. 11 that its geolocation controls would only work after customers installed an updated version of the app, and initially required updates only from accounts its own data identified as potentially belonging to Nevada residents. Investigators running the older app were therefore able to continue trading from within Nevada after the deadline.
Kalshi acknowledged that the investigators were using a previous app version that was not covered by the new geofence and later said it would force remaining customers to update within three to five days. Its argument focuses instead on how investigators accessed the older version and whether they deliberately supplied false residency information or circumvented restrictions while testing the system.
A Nevada judge had already issued a preliminary injunction earlier this year barring Kalshi from offering sports, election, and entertainment event contracts in the state without a gaming license. The Gaming Control Board asked the court in June to hold Kalshi in contempt after investigators repeatedly found that people in Nevada could still access covered contracts.
Kalshi maintains that its contracts are federally regulated derivatives under the Commodity Exchange Act and fall under the exclusive jurisdiction of the Commodity Futures Trading Commission. Nevada considers sports event contracts gambling and argues that Kalshi cannot offer them to residents without complying with the same licensing and tax requirements imposed on sportsbooks. Similar disputes are now being fought in Michigan, New York, Washington, and other states.
The Nevada court must now decide whether Kalshi’s implementation satisfied the July agreement by Aug. 12 and whether the nine trades justify the requested daily penalty. Kalshi’s allegations against investigators add another dispute to that hearing, but they do not change the regulator’s central claim: people physically located in Nevada were still able to trade prohibited contracts after the deadline.