Kalshi will replace the in-house geolocation service it previously used to geofence Nevada with a third-party geolocation provider by Aug. 12, after the state said the in-house solution didn’t work. The company’s willingness to do so was announced by the Nevada Gaming Control Board (NGCB) Friday, based on an agreement filed in state court the day before.
Kalshi’s sports contracts have been banned in Nevada since March, when the state’s First Judicial District court issued a temporary restraining order. At first, Kalshi used the addresses users provided upon sign-up to enforce this ban, meaning that out-of-state residents visiting Nevada could still trade any contracts they wished.
In May, however, the court ordered Kalshi to begin geofencing the state instead.
Rather than partnering with a third-party geolocation specialist, Kalshi used an in-house solution, which the state said was based on a user’s IP address.
Last month, the state submitted a filing to the court arguing that the in-house solution didn’t work and calling for Kalshi to be held in contempt of court. The state said its investigators were able to place bets on Kalshi’s contracts from locations in Nevada.
It added that despite Kalshi having a $40 billion valuation, and the company arguing before the ban that geolocation would be prohibitively expensive, Kalshi spent only $190,000 on the tool.
In Friday’s press release, the NGCB framed the agreement as one to “definitively stop Kalshi’s continued unlawful operation” in the state.
If the third-party geofence isn’t in place and functioning by Aug, 12, Kalshi will be required to pay $120,000 per day.
“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. We will continue to vigorously enforce Nevada law to safeguard gaming in our state,” NGCB Chairman Mike Dreitzer said. “The Board has taken decisive action in recent months to halt the operations of other prediction markets in the state and has successfully restricted the operation of all unlicensed prediction markets known to be operating in Nevada.”
Even though states across the country have attempted to shut down Kalshi’s sports contracts. Nevada is one of only two states that has actually forced the prediction market to stop offering its contracts within its borders. In Michigan, the other state with a ban in place, Kalshi is currently using registration data but will have to geofence using a third-party provider from Aug. 12.
