Prediction market operator Kalshi has agreed with the Nevada Gaming Control Board to deploy a third-party geolocation system blocking state residents from trading contracts on elections, entertainment and sporting events. The company must launch the system by August 12 or face a penalty of $120,000 per day.
Under the terms published late last week, Kalshi hired GeoComply to build the solution. The operator had previously tried to restrict access in-house through IP blocking, spending under $200,000 and testing the system on relatives and friends. The approach failed — Nevada residents continued reaching restricted markets, and NGCB investigators 'repeatedly' placed bets on prohibited contracts.
In February a judge issued a preliminary injunction against Kalshi at the request of NGCB, which argued the operator's contracts amounted to gambling and that the company held no state licence. The regulator sought to hold Kalshi in contempt of court, with a hearing scheduled for this Wednesday. Following a joint motion filed Thursday, both sides asked to cancel the session.
The GeoComply block will remain in place for the duration of the injunction. Nevada is not the only state blocking Kalshi. Late last month a Michigan judge barred the company from offering sports contracts and also required a third-party solution by the same August 12 deadline, this time under threat of a $500,000 daily fine. Kalshi is working with GeoComply there as well. The situation was complicated by CFTC chair Michael Selig, who ordered the operator to disregard the Michigan court ruling, forcing a choice between state penalties and federal sanction.
