Kalshi accused Nevada's top gaming regulator of violating federal law and dismissed a pending contempt motion as a publicity stunt, escalating a dispute that could saddle the CFTC-regulated prediction market with $120,000-a-day penalties.
The clash puts Kalshi on a collision course with a state that has already sued to shut down its sports and election contracts. With similar actions in New York, Baltimore and Michigan, the Nevada outcome will help decide whether federal financial regulation preempts state gambling law for a fast-growing corner of the derivatives market.
The order
A Nevada court on May 18 ordered Kalshi to deploy geolocation tools capable of blocking state residents from event-based contracts tied to sports, elections and entertainment. Kalshi built its own geofencing system in-house for roughly $190,000. The Nevada Gaming Control Board called that solution rudimentary compared with third-party tools used by licensed sportsbooks.
On June 12, the board asked the First Judicial District Court to hold Kalshi in contempt after investigators placed nine trades on the platform while connected to cellular networks inside the state. That happened one day after a compliance deadline. Kalshi and the board later reached a stipulation requiring full deployment of multi-source geofencing through GeoComply, a Nevada-licensed vendor, by August 12. A hearing on the contempt motion was scheduled for August 15.
Kalshi's response
Kalshi Chief Regulatory Officer Rick Heaslip said on X that the company "went above and beyond to geofence Nevada as requested," hired the state-approved vendor at Nevada's request and kept regulators informed. Heaslip accused investigators of using false information to circumvent the platform's blocks, and called the enforcement push a "vindictive waste of taxpayer dollars at the bidding of casinos."
The company's lawyers contend the investigators misrepresented their residences and that at least one probed around the geofence, actions Kalshi says violated federal law. In a joint stipulation, Kalshi acknowledged the trades occurred despite IP- and residency-based blocks but said it does not concede the conduct warrants contempt.
The federal claim
Kalshi's underlying argument is that its status as a CFTC-designated contract market places it under exclusive federal jurisdiction. "Nevada is trying to block its own residents from accessing a federally regulated market. Kalshi is subject to exclusive federal jurisdiction, not state law," a company spokesperson said.
That posture gained ground on August 11, when the Commodity Futures Trading Commission used emergency authority to order Kalshi to continue operating under the Commodity Exchange Act's core principles. The Nevada Supreme Court denied Kalshi's request to stay the underlying injunction in early July.
Nevada Gaming Control Board Chairman Mike Dreitzer, in the stipulation, said, "The Court required Kalshi to stop offering covered event contracts in Nevada, and Kalshi violated that order. This agreement will ensure that Kalshi fully complies with Nevada law moving forward, or it will face stiff penalties."
The Nevada Gaming Control Board had not publicly answered Kalshi's federal-law allegation by press time, and reporting on the dispute has come almost entirely from business and gaming trade outlets. Dreitzer's stipulation statement predates the accusation and does not address it.
A ruling from the Carson City court on the contempt motion is expected in the coming days. New York Governor Kathy Hochul and Attorney General Letitia James sued Kalshi on July 31, opening a second state front.