Kalshi Accuses Nevada Regulator Of Illegal Geolocation Investigation
The prediction market operator has challenged an NGCB investigation after regulators alleged its Nevada geofencing measures failed to comply with a court order.
Kalshi has accused investigators from the Nevada Gaming Control Board (NGCB) of breaking federal law while testing the prediction market operator’s geolocation controls in the state. The dispute follows allegations that investigators were able to place trades through Kalshi despite a court-imposed requirement for the platform to restrict access from Nevada.
The NGCB reportedly found that investigators could circumvent Kalshi’s geofencing and place nine trades through its mobile application while physically located in Nevada and connected to local mobile networks. The activity allegedly took place after an 12 August deadline for Kalshi to implement the required restrictions, prompting Nevada to ask the court to consider penalties of $120,000 per day.
Kalshi Challenges NGCB Investigation
Kalshi lawyer Andrew L Porter described the regulator’s account of events as a “complete mischaracterization of the record” and questioned the methods used by investigators to test the platform. Porter alleged that NGCB investigators misrepresented their residence when accessing Kalshi, although he did not identify the specific federal law he believes was breached.
“It is an abuse of state power to single out and target one company because it chose to defend itself,” Porter said in a response to the allegations.
The NGCB has rejected Kalshi’s accusations and maintains that the company failed to meet the deadline established for compliance with Nevada’s geofencing requirements.
“Kalshi’s accusations are baseless, and they cannot obscure the fact that Kalshi missed its agreed-upon deadline to comply with Nevada law,” an NGCB spokesperson said.
“Kalshi’s consistent failures to comply with the court’s orders left the Board with no choice but to advise the court of Kalshi’s noncompliance.”
Operator Defends Geofencing Measures
Kalshi general counsel and chief regulatory officer Rick Heaslip said the company had taken significant steps to prevent Nevada residents from accessing its platform. This included working with geolocation specialist GeoComply after Kalshi had previously spent $190,000 developing its own system, which Nevada regulators subsequently considered insufficient.
Heaslip said Kalshi had gone “above and beyond to geofence Nevada as requested” and claimed the operator had kept regulators informed while implementing its new controls.
“We hired a state-approved vendor and updated Nevada every step of the way, with no response,” Heaslip said. “Instead of engaging, they falsified information (breaking federal law) to hunt for a loophole and manufacture another legal grievance.”
Kalshi said it has since addressed the geolocation issues identified during the investigation. The effectiveness of those measures could also prove significant elsewhere, with the operator facing similar requirements to restrict access to certain products in Michigan and Washington.
Nevada Seeks $120,000-Per-Day Penalty
The disagreement forms part of a wider legal dispute between Kalshi and state gaming authorities over the regulatory status of prediction markets. While Kalshi operates as a Commodity Futures Trading Commission-regulated exchange, several states have challenged the availability of sports-related event contracts within their jurisdictions.
Nevada has now asked the court to impose a penalty of $120,000 for each day that Kalshi remained non-compliant with its geofencing obligations. The court will consider the operator’s response before determining whether any financial penalty should be imposed.
Kalshi has not specified which federal statute it believes NGCB investigators violated during their testing of the platform. Heaslip has nevertheless maintained that the regulator’s conduct was unlawful, describing its legal action as “a vindictive waste of taxpayer dollars at the bidding of casinos.”
