The Nevada Gaming Control Board says Kalshi failed to stop sports, election and entertainment betting in Nevada by the August 12 deadline. The Board now wants to fine Kalshi $120,000 per day.
The Nevada Independent has reported that state investigators were able to purchase banned-event contracts. In July, Kalshi agreed with the state to geo-block its offering utilizing GeoComply, a Nevada-licensed technology company.
Apparently, this could be bypassed by running an older version of the Kalshi app not subject to geo-fencing.In a letter to the Board on Friday, Kalshi's attorneys argued that investigators were only able to place trades by violating federal law- misrepresenting their residence to Kalshi- and, in at least one case, deliberately circumventing Kalshi's restrictions that otherwise blocked them from trading.
In a statement, Kalshi General Counsel Rick Heaslip called the control board's lawsuit "a vindictive waste of taxpayer dollars at the bidding of casinos." He further noted that Kalshi "went above and beyond to geofence Nevada as requested.We hired a state-approved vendor and updated Nevada every step of the way, with no response."
The Control Board dismissed Kalshi’s accusations as ‘’baseless,’’ noting that the operator consistently failed to comply with the court’s orders.
The state, Kalshi and two other prediction markets are awaiting a ruling from the 9th US Circuit Court of Appeals, which could support the regulatory agency’s attempt to ban these companies from operating in Nevada. Kalshi and its affiliated entities are facing scrutiny from various bodies. For example, the Nevada Council of Problem Gambling intends to sever ties soon with the National Council for Problem Gambling over the latter’s partnership with Kalshi.
Earlier, a federal court in New York rejected Kalshi's request for preliminary relief in July, finding it had not shown that federal commodities law pre-empted the state's gambling restrictions.
On August 12, the CFTC invoked emergency authority after New York's legal action against Kalshi raised the prospect of disruption to its event-contract operations.
Last week, a Washington court ordered Kalshi to restrict its prediction markets. The order requires Kalshi to implement two phases of geofencing, as its dispute with Washington has added to a series of conflicting court decisions over state authority.
At the beginning of the month, Kalshi suffered a legal setback in Utah after a federal judge ruled that the state has the authority to enforce its gambling laws against prediction market operators.
As scrutiny of prediction markets continues to grow, Netflix has also released a related short documentary exploring the topic from a US market perspective. Global Gaming Insider reviewed the episode, which covers a range of issues including Donald Trump, insider trading, problem gambling and instances of journalists being coerced, among other topics.
Last week, the New York City Council launched an investigation into prediction market platforms’ marketing, expanding scrutiny beyond legal disputes over event contracts
