The Nevada Gaming Control Board (NGCB) said Friday its investigators were able to place nine trades in Nevada days after prediction market Kalshi was supposed to comply with a mandate to geofence the state out of its offerings, including sports markets.
The regulator asked the First Judicial Court in Carson City to allow it to begin fining the company $120,000 per day. But Kalshi pushed back, saying that it not only engaged state-licensed geofencing company GeoComply to meet the mandate, but that NGCB investigators “falsified information” in their attempts to use the platform.
A Nevada judge in June ordered Kalshi to geofence the state by Aug. 12. Per court documents, Kalshi says it kept the NGCB apprised of its progress throughout the process of retaining and working with GeoComply, and that the regulator did not ask for additional information or ask questions during the process.
Rather, Kalshi attorney Andrew L. Porter of Millbank LLP wrote, “Instead, you waited until the day after August 12 to have your investigators attempt to place trades on the platform. Those investigators were able to place a trade because they had violated federal law by misrepresenting their residence to Kalshi, and in at least one instance, actively worked to circumvent Kalshi restrictions that blocked the investigator from trading.”
MI, WA judges also issued restrictions
The back-and-forth late last week opens another chapter in the contentious argument between the state and Kalshi. Nevada is the first state to win a court-ordered ban of Kalshi and the first to attempt to enforce it. Since then, judges in Michigan and Washington have issued restrictions or bans on the platform. At issue is that Kalshi is federally regulated, not under state oversight, and state stakeholders say the company is offering de facto sports betting without proper controls or a state tax structure.
According to the Nevada Independent, when the NGCB questioned Kalshi about the trades, it was told that investigators were using a “previous version” of the Kalshi app that “was not subject to geofencing.” An InGame reporter had a similar experience in Michigan last week, where the company was also instructed to geofence by Aug. 12. The reporter was initially able to place trades, but when he updated the platform, he was locked out of certain trades. At no time was there a message on the Kalshi app indicating that an update was needed.
In Nevada, Kalshi general counsel Rick Heaslip provided a statement to the Independent calling the NGCB lawsuit “a vindictive waste of taxpayer dollars at the bidding of casinos.”
Kalshi’s first attempt incomplete
Kalshi’s sports contracts have been prohibited in Nevada since March, when a temporary restraining order was issued. The company initially implemented an address-based system to ban trades from Nevada, but this allowed anyone who signed up for Kalshi with an address outside of Nevada to trade in the state. The ban is to prevent trades that originate in the state, not just trades by Nevada residents.
The NGCB went back to court, and last month the parties agreed that Kalshi would begin using a third-party geofencing system as of Aug. 12.
In Washington, Kalshi will be required to geofence beginning Sept. 2. Contracts based on culture, elections, mention markets, politics, science, sports, and technology will not be allowed.
