The Nevada Gaming Control Board announced late Friday that it reached an agreement with Kalshi to stop what regulators called the prediction market operator’s continued unlawful operation in Nevada by Aug. 12 or risk a fine of $120,000 per day.
On May 18, the First Judicial District Court in Nevada entered a preliminary injunction prohibiting Kalshi from offering or facilitating certain contracts on its platform in Nevada. In spite of the court order, Gaming Control Board investigators were repeatedly able to enter into the contracts that Kalshi was prohibited from offering. The Board moved to hold Kalshi in contempt of court for violating the order.
In light of the agreement, a hearing on Wednesday has been vacated.
Regulators have argued that Kalshi has taken hundreds of millions of dollars in wagers on the World Cup and the NBA and Stanley Cup finals. The Board accused Kalshi of not geofencing its operations.
Board Chair Mike Dreitzer said that rather than being held in contempt, Kalshi has agreed to immediately take steps to implement a robust, multi-source, geofencing solution by a third-party commercial provider, which will prevent anyone within the geographic boundaries of Nevada from entering into the prohibited contracts on Kalshi’s platform.
Kalshi has already begun the implementation process and must complete it by Aug. 12 or pay the Board $120,000 per day until implementation is complete, Dreitzer said.
Kalshi will also provide periodic updates to the Board on its progress, Dreitzer said.
This is detailed in an agreement that the Board and Kalshi filed with the First Judicial District Court on Thursday. Kalshi admitted that Board investigators entered into sports-, election- and entertainment-related contracts from within the state in violation of the court order, detailed its process and timeline for full compliance with Nevada law, and agreed to the $120,000/day penalty if it failed to meet that timeline.
“This agreement will ensure that Kalshi fully complies with Nevada law moving forward or it will face stiff penalties,” Drietzer said. “We will continue to vigorously enforce Nevada law to safeguard gaming in our state.”
Kalshi has argued in federal court that it falls under the jurisdiction of the Commodity Futures Trading Commission and is not subject to state regulation, a position backed by the CFTC.
The Board has taken action in recent months to halt the operations of other prediction markets in the state and has successfully restricted all unlicensed prediction markets that had been known to be operating in Nevada.
“Kalshi’s stubborn refusal to comply with the preliminary injunction is causing severe and ongoing harm to Nevada, its finances, and its citizens,” according to the court filing seeking a contempt order. “Every day, Kalshi takes in hundreds of millions in wagers on such events as the NBA Finals, the Stanley Cup Finals, and FIFA World Cup. At the same time, Kalshi is severely harming the gaming industry, because it refuses to follow the same rules as its licensed sportsbook competitors, who actually geofence. This is an intolerable state of affairs. In light of the Board’s investigation and Kalshi’s own admissions that establish its violation of the court order, the court shall hold Kalshi in contempt. Kalshi will never get the message otherwise.”
