Nevada and California Intensify Legal Action Against Kalshi

Nevada Seeks Contempt Order Against Kalshi as California Joins Multistate Appeal – Legal Pressure Intensifies Across Key US Gaming States

Key Takeaways

• Nevada regulators have asked a state court to hold Kalshi in contempt for allegedly failing to comply with an order blocking certain contracts for users in Nevada.
• The state is seeking penalties of at least $120,000 per day for continued non-compliance.
• California has joined a coalition of 37 attorneys general in an amicus brief against Kalshi in a federal appeals case.
• Three California gaming tribes are separately pursuing legal action against Kalshi under federal Indian gaming law.

Nevada Requests Contempt Finding Over Alleged Non-Compliance

Nevada regulators have taken a further step in their legal dispute with prediction market platform Kalshi. On 13 June, the Nevada Gaming Control Board announced that it has asked the state’s First Judicial District Court to hold Kalshi in contempt of court.

The request relates to a preliminary order first issued on 3 April that blocks Kalshi from allowing users located in Nevada to trade sports, entertainment and election contracts. The court later affirmed that decision through an amended order on 18 May. According to the board, Kalshi has not complied with the amended order.

Nevada remains the only US jurisdiction where a state court has issued an order blocking Kalshi’s trading activity. Regulators argue that the company has continued to allow access in a way that does not meet the court’s requirements.

In its latest filing, the state is seeking penalties of at least 120,000 US dollars per day for every day Kalshi remains out of compliance. The Nevada Gaming Control Board described the situation in court documents as an “intolerable state of affairs” and stated that it will continue to enforce state gaming law.

Dispute Centers on IP Blocking Versus Geofencing

The disagreement focuses in part on how Kalshi restricts access from Nevada. After the original order, the company blocked users whose internet protocol addresses are located in the state.

However, according to Nevada’s court filings, this measure is not equivalent to full geofencing. Geofencing is commonly used in the US gambling industry and restricts access at the jurisdictional level rather than relying only on IP address detection.

The state argues that IP addresses are “notoriously unreliable” for determining a user’s location. Court documents state that Kalshi relies on what regulators describe as a “homegrown solution” that costs 190,000 US dollars and is based solely on IP addresses.

Prediction market operators, including Kalshi, have previously resisted implementing geofencing technology. According to the filings, cost considerations and federal regulatory requirements mandating open access to US users are among the factors cited.

In a public statement on the social platform X, Kalshi spokesperson Jacki McGavick said the company had complied with the relevant Nevada court order. She added that if regulators had concerns about technological flaws, they had not provided the necessary information to address them.

California Joins Multistate Brief in Federal Appeals Case

On the same day as Nevada’s announcement, California Attorney General Rob Bonta’s office confirmed that the state has joined a coalition of 37 attorneys general in filing an amicus brief against Kalshi. The brief was submitted in a case brought by Kalshi against the state of Ohio and is currently before the US Court of Appeals for the Sixth Circuit.

According to the California Attorney General’s office, this marks the seventh time the state has participated in multistate efforts involving prediction markets. Two weeks earlier, California joined a nearly identical brief in Kalshi’s case against Tennessee. That matter has been consolidated with the Ohio case before the same federal appeals court.

While California has not initiated direct litigation against Kalshi, the public announcement of the brief signals a more visible role in coordinated enforcement efforts. In a statement, Bonta said the filing reflects a bipartisan commitment to protecting state regulatory authority over gambling and consumer protection laws.

Parallel Tribal Litigation in California

In addition to the multistate briefs, Kalshi faces a separate legal challenge in California from three gaming tribes: Blue Lake Rancheria, Chicken Ranch Rancheria and Picayune Rancheria.

The tribes filed suit last year, alleging that Kalshi’s operations violate the federal Indian Gaming Regulatory Act. Although they did not secure a preliminary injunction, the case is currently on appeal before the Ninth Circuit Court of Appeals.

Gaming regulation in California carries significant economic weight. According to the National Indian Gaming Commission, tribal casinos in California and northern Nevada generated 12.1 billion US dollars in gross gaming revenue in fiscal year 2024, more than any other US region.

Attorney General Bonta has also been active in other gaming-related matters, including regulatory changes affecting state card rooms, the removal of betting machines at the Santa Anita racetrack and an opinion declaring daily fantasy sports illegal in California.

Political Context in Nevada and California

The legal actions come during an election year for key officials involved. Nevada Attorney General Aaron Ford, who is leading the state’s case, is campaigning for governor after winning the Democratic primary. He will face incumbent Republican Governor Joe Lombardo in the November general election.

In California, Bonta is also seeking reelection as attorney general. Both officials have publicly framed their actions as efforts to uphold state authority over gambling regulation.

Our Assessment

Nevada’s request for a contempt finding and daily financial penalties represents an escalation in the state’s legal battle with Kalshi and could result in significant financial consequences if the court rules in favor of regulators. At the same time, California’s participation in multistate amicus briefs and ongoing tribal litigation indicate coordinated efforts among states and tribal authorities to challenge the legal framework used by prediction markets. For users and market participants, the developments highlight that access to certain contracts may remain subject to jurisdiction-specific court decisions and regulatory enforcement actions.