Nevada Sports Betting Regulators Seek Contempt Ruling Against Kalshi

Kalshi one of the biggest companies within Prediction market betting

Nevada sports betting regulators have escalated their dispute with prediction market platform Kalshi by seeking a contempt of court ruling. The Nevada Gaming Control Board (NGCB) has filed a request with the First Judicial District Court of the State of Nevada. The action stems from allegations that Kalshi violated a previous court order by allowing Nevada residents to access sports-related prediction contracts despite restrictions. Consequently, this case highlights the ongoing tension between state gaming regulations and federally approved prediction markets. The dispute centers on geofencing failures and raises critical questions about jurisdictional authority over sports betting operations.

Nevada Gaming Control Board Files Contempt Motion Against Kalshi

Last Friday, the Nevada Gaming Control Board requested the First Judicial District Court to hold Kalshi in contempt for violating court orders restricting Nevada sports betting access. The motion seeks penalties of at least $120,000 per day for each day Kalshi remains non-compliant.

The state court initially issued a preliminary order on April 3, which was affirmed through an amended order on May 18. According to court filings, Kalshi has failed to comply with the amended order. The board alleges the company is “flagrantly” flouting the order and has created “an intolerable state of affairs”.

The enforcement action followed a series of legal battles. Earlier, the board issued a cease and desist letter when Kalshi began offering sports betting pools. Kalshi responded with a federal lawsuit and secured an injunction from U.S. District Judge Andrew Gordon. In March, Nevada Judge Jason D. Woodbury granted the board’s request for an injunction prohibiting Kalshi from accepting bets in Nevada.

Nevada remains the only state with an active, court-enforced ban against Kalshi. Chairman Mike Dreitzer stated the board would “continue to vigorously enforce Nevada law to safeguard gaming in our state”.

How Kalshi’s Geofencing System Failed Nevada Sports Betting Restrictions

The compliance failure centers on Kalshi’s inadequate geofencing implementation. According to Nevada’s contempt motion, Kalshi spent only $190,000 on a homegrown solution that relies exclusively on internet protocol addresses. Board investigators confirmed they can repeatedly access Kalshi’s platform to purchase sports, election, and entertainment contracts from Nevada.

Significantly, Kalshi’s assertions to the state court contradict statements made to federal court. In a sworn declaration to the federal court, Kalshi’s head of markets stated that IP address-based solutions would not suffice, claiming effective geofencing requires triangulating users’ locations using GPS and other methods. The company also claimed it lacked in-house capacity and would need tens of millions of dollars annually for commercially available solutions.

Kalshi now presents the exact opposite position to the state court, asserting its homegrown solution effectively geofences Nevada users using only IP addresses. Nevada characterizes this $190,000 system as “rudimentary, non-lab-tested and woefully inadequate”.

Carson City District Court Judge Jason Woodbury gave Kalshi until May 4 to implement proper geofencing measures. The judge required any extension request to include detailed explanations of implementation progress, remaining tasks, and completion timelines. Commercial geofencing solutions exist, but Kalshi refuses to use them, contending its homegrown approach meets requirements.

Federal vs. State Authority: The Legal Battle Over Prediction Markets

The Nevada sports betting dispute reflects a nationwide jurisdictional conflict between federal and state regulators. Sixteen states are involved in legal proceedings against prediction market platforms. The Commodity Futures Trading Commission asserts exclusive authority over these platforms, arguing event contracts qualify as federally regulated swaps rather than gambling products subject to state oversight.

CFTC Chairman Michael Selig has sued six states to defend what the agency describes as its exclusive jurisdiction. Wisconsin, New York, Connecticut, Illinois, Arizona, and Minnesota face federal lawsuits after taking enforcement actions against prediction market operators. Meanwhile, a bipartisan coalition of 41 state attorneys general recently urged the CFTC to reaffirm that jurisdiction over sports gambling belongs to the states.

Federal courts have reached conflicting conclusions. On April 6, 2026, the Third Circuit ruled 2-1 that New Jersey gaming regulators cannot enforce state gambling laws against Kalshi’s sports-related event contracts. The majority held that the Commodity Exchange Act grants the CFTC exclusive jurisdiction over trading on designated contract markets, preempting state gambling laws. On the other side, the U.S. District Court for the District of Maryland denied Kalshi’s preliminary injunction, finding Congress lacked a clear and manifest purpose to preempt state gambling laws when it enacted the Dodd-Frank Act.

This circuit split indicates the litigation could reach the Supreme Court.

Debbie