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Nevada gaming regulators are escalating their legal battle against Kalshi, asking a state judge to hold the prediction market platform in contempt for allegedly violating a preliminary injunction issued earlier this year.
The Nevada Gaming Control Board filed a motion accusing Kalshi of failing to comply with a court order requiring the company to block Nevada users from accessing sports, election, and entertainment-related event contracts through geofencing technology, according to reporting from Legal Sports Report.
According to the NGCB, Kalshi continues to allow users located in Nevada to trade restricted contracts despite the court’s directive.
“Kalshi has not complied with the Court’s May 18, 2026, order requiring Kalshi to geofence its operations so that it does not offer or facilitate the offering of any sports-, election-, or entertainment-related event contract to anyone located in Nevada,” the NGCB said in its filing.
The regulator is reportedly seeking significant sanctions, including potentially steep monetary penalties tied to continued violations.
Nevada intensifies enforcement efforts against Kalshi
Nevada first sued Kalshi in February 2026, alleging the company was offering unlicensed wagering products in violation of state gaming law. Regulators argued that Kalshi’s event contracts function similarly to traditional sports betting and therefore require state licensure.
In March, Carson City District Judge Jason Woodbury granted a temporary restraining order barring Kalshi from offering certain contracts in Nevada. Reuters reported that Woodbury determined Kalshi’s sports-related contracts were effectively indistinguishable from traditional sports wagering under Nevada law.
The court later expanded the temporary order into a preliminary injunction in April, siding with the NGCB’s argument that the contracts constitute gambling activity under state law.
Judge Woodbury specifically ordered Kalshi to implement geofencing measures preventing Nevada residents from accessing covered contracts by early May.
Geofencing dispute at center of contempt motion
According to Nevada regulators, Kalshi failed to deploy an adequate geolocation system and instead relied primarily on IP-address detection, which the state argues is insufficient and easily circumvented.
The NGCB claims investigators were repeatedly able to access and purchase restricted contracts from within Nevada after the injunction took effect.
Court filings cited by Legal Sports Report indicate Nevada regulators believe commercial-grade geofencing solutions are readily available and widely used throughout the regulated gaming industry.
Kalshi is expected to argue that it made good-faith efforts to comply with the order and that the injunction lacked detailed technical requirements regarding how the geofencing system had to operate.
To hold Kalshi in contempt, the court would likely need to determine that the company willfully violated the injunction rather than merely implementing an ineffective compliance system.
Broader legal battle over prediction markets continues
The Nevada case is part of a broader national dispute over whether federally regulated prediction markets fall under the exclusive jurisdiction of the Commodity Futures Trading Commission or can also be regulated by state gaming authorities.
Kalshi has faced enforcement actions or litigation in multiple states, including Massachusetts, Arizona and Tennessee, as regulators challenge the legality of sports-related event contracts.
A February 2026 legal analysis published by Holland & Knight noted that courts across the country have reached conflicting conclusions regarding whether prediction market contracts qualify as federally regulated financial instruments or unlawful sports wagering products under state law.
Kalshi’s ongoing litigation against multiple states could ultimately shape the future regulatory framework for prediction markets nationwide.
