Kalshi Avoids Contempt by Hiring GeoComply, With an August 12 Nevada Deadline and $120,000 a Day at Stake

Kalshi has settled its way out of a contempt finding in Nevada by agreeing to do what the state said it should have done in the first place. Under a joint stipulation filed in Carson City's First Judicial District Court on July 23 and announced by the Nevada Gaming Control Board on July 24, the prediction market will implement commercial-grade geofencing to keep users inside Nevada out of prohibited event contracts, complete the work by August 12, 2026, and report progress to the board along the way. Miss the deadline and the penalty is $120,000 a day until the system is in place.

The vendor is the detail that matters. Kalshi has contracted GeoComply, the geolocation provider that underpins compliance for licensed US sportsbooks, replacing the in-house system at the center of the dispute. Board chair Mike Dreitzer said that rather than being held in contempt, Kalshi agreed to immediately begin implementing "a robust, multi-source, geofencing solution by a third-party commercial provider," which will stop anyone within Nevada's boundaries from entering the prohibited contracts.

How it got here

The agreement closes a sequence that started with a court order and got worse from there. Judge Jason Woodbury's May 18 order required Kalshi to geofence Nevada users out of covered event contracts. The board's enforcement investigators then bought prohibited contracts from inside the state on eight occasions between May 28 and June 1, ran the test again from June 8 to 11 on sporting events plus a celebrity wedding market, and cleared every purchase. On June 15 the board moved for contempt, seeking either disgorgement of the revenue earned in violation of the order or a flat $120,000 a day.

The technical failure was specific. Kalshi told the board it had spent roughly $190,000 building a homegrown geoblocking system that relied only on IP-address detection, which the state argued a VPN defeats trivially and which falls short of the multi-source geolocation licensed Nevada sportsbooks have used for years. Kalshi called it a technical glitch and criticized the board for not raising it privately; spokesperson Jacki McGavick said at the time that if the board "had a genuine concern regarding a technological flaw in our system, they would have given us the information we need to fix it." The stipulation resolves that argument by putting Kalshi on the same vendor stack as the regulated operators it competes with, and it does so without the court having to decide whether the earlier violations were willful.

The compliance cost of running outside the licensed model

Kalshi's position across the United States has been that its CFTC-regulated event contracts are federally regulated financial products beyond the reach of state gambling law. Nevada is where that argument has cost the most operationally, and the fix is an admission of a practical point rather than a legal one: an exchange offering sports outcomes to US retail customers ends up buying the same geolocation infrastructure as a sportsbook, whichever regulator it answers to. The $190,000 in-house build is now a write-off against a commercial contract on a three-week timeline.

The legal question is unresolved everywhere else, and it is not going Kalshi's way. On July 7, US District Judge Analisa Torres denied the company's request for a preliminary injunction against New York, finding that state gambling law reaches its sports-related event contracts and is not preempted by the Commodity Exchange Act; Kalshi has appealed to the Second Circuit while New York's attorney general prepares an enforcement action. That ruling, the widening split among state courts and suits like Kentucky's against Kalshi, Polymarket and VGW mean a state-by-state compliance build is now a standing cost of the business, not a one-off.

That cost sits against a company still scaling fast. Kalshi did $21.1 billion in volume in June against Polymarket's $9.7 billion, and its valuation has moved from about $5 billion in early 2025 to a reported $40 billion target for a round that could close in the third quarter, the trajectory behind its stated IPO ambitions. For affiliates routing traffic to event contracts, the Nevada outcome sets a practical marker: prohibited-state traffic will increasingly fail at the geolocation layer rather than convert, and the states drawing hard lines are the ones with mature licensed sportsbook markets to protect. Kalshi has until August 12 to have GeoComply live.