Nevada Asks Court to Hold Kalshi in Contempt, Seeks $120,000-a-Day Fine Over Geofencing

The Nevada Gaming Control Board has asked a state judge to hold Kalshi in contempt of court, alleging the prediction market kept selling sports, election, and entertainment event contracts to people inside Nevada for weeks after a May 18, 2026 order required it to geofence them out. In a motion filed June 15 in Carson City's First Judicial District Court, the regulator is seeking either disgorgement of all revenue Kalshi earned in violation of the order or a flat sanction of $120,000 per day until the company complies.

The claim rests on field work, not theory. Board enforcement investigators say they bought prohibited contracts on Kalshi's platform while physically located in Nevada on eight occasions across May 28 to June 1, then ran the test again from June 8 to 11 on similar sporting events plus a celebrity wedding market. Every purchase cleared. According to the filing, Kalshi told the board it spent roughly $190,000 building a "homegrown" geoblocking system that relies only on IP-address detection, which the state argues is trivially defeated by a VPN and falls short of the commercial-grade geofencing that licensed Nevada sportsbooks have used for years.

Kalshi calls the failure a technical glitch and faults the board for not flagging it privately first. "If the NGCB had a genuine concern regarding a technological flaw in our system, they would have given us the information we need to fix it, yet they haven't," spokesperson Jacki McGavick said. Board chairman Mike Dreitzer framed it as defiance: "The court has required Kalshi to stop offering covered event contracts in Nevada. We will continue to vigorously enforce Nevada law to safeguard gaming in our state." To win a contempt finding, the court will likely have to decide Kalshi willfully violated Judge Jason Woodbury's injunction rather than simply built a system that did not work.

How Nevada boxed Kalshi in

Nevada sued Kalshi in February 2026, arguing its event contracts are unlicensed wagering dressed as derivatives. Woodbury granted a temporary restraining order in March, finding the sports contracts effectively indistinguishable from traditional sports bets under state law, then converted it into a preliminary injunction in late April with a hard deadline to block Nevada access. The May 18 order spelled out the geofencing requirement the board now says Kalshi ignored.

This is where Nevada's strategy diverges sharply from the federal fight Kalshi has been winning. The company beat back New Jersey in the Third Circuit on April 6, where a divided 2-1 panel held that the Commodity Futures Trading Commission has likely exclusive jurisdiction over sports event contracts as "swaps" under the Commodity Exchange Act, the first federal appeals court to rule on the question. Judge Jane Richards Roth dissented, writing the contracts are "virtually indistinguishable" from sports bets. Nevada sidestepped that battleground by litigating in state court, where the federal preemption argument carries far less weight, and it has now won preliminary injunctions against every major operator in the market.

The precedent here is Nevada's own. The board started its sweep with a March 2025 cease-and-desist against Kalshi and then took the same playbook to Polymarket's QCX unit, Coinbase, Crypto.com, and Robinhood, securing court orders against the largest platforms one by one. Polymarket and Coinbase complied with their Nevada injunctions rather than test the board's patience. Kalshi did not, and that is the distinction the contempt motion is built on.

Why the stakes scale with Kalshi's growth

The penalty math matters because Kalshi is no longer a niche venue. The company is in talks to raise capital at a roughly $40 billion valuation, nearly double the $22 billion mark set only two months earlier with backing from Sequoia Capital, Andreessen Horowitz, and Morgan Stanley. Platform volume hit $16.81 billion in May 2026 and $21.1 billion in June, and sports contracts drive roughly 65% of that flow, the same volume that has pressured sports-betting handle in Massachusetts. A $120,000 daily fine is rounding error against those numbers, which is why the board also asked for disgorgement: the threat that bites is forfeiting Nevada revenue outright, not a per-day meter.

For sportsbook operators and affiliates, the read is concrete. Licensed books pay for certified geolocation, file compliance reports, and remit Nevada gaming taxes, while a prediction market running IP-only checks was, by the board's account, still taking action on the same sporting events from the same state. The contempt case is the first test of whether a state court will put real money behind a geofencing order against a CFTC-regulated venue. A win for Nevada gives other states suing Kalshi a template that does not depend on resolving the federal preemption question, while a Kalshi win narrows what state injunctions can actually force. The split between the federal track, where courts keep landing on opposite conclusions, and the state track sharpens the case for the Supreme Court, especially after the CFTC sued Arizona, Connecticut, and Illinois to block their own enforcement.

Woodbury has not set a hearing date on the contempt motion. The board's filing cites violations of four Nevada Revised Statutes and asks the court to keep the daily sanction running until Kalshi demonstrates compliant geofencing.