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The Nevada Gaming Control Board (NGCB) has asked the First Judicial District Court for the State of Nevada to order KalshiEX LLC to appear and show cause why it should not be held in contempt for allegedly violating a preliminary injunction requiring it to block access to certain event contracts within the state.
In its filing, the NGCB alleges that Kalshi has failed to comply with the court’s May 18, 2026, order requiring the company to implement geolocation controls preventing users in Nevada from accessing sports-, election-, and entertainment-related event contracts.
The board is seeking a contempt finding and is requesting monetary sanctions, including potentially significant daily penalties and disgorgement of revenue allegedly derived from Nevada-based activity, according to subsequent reporting on the filing.
Nevada’s preliminary injunction against Kalshi
The dispute began on Feb. 17, 2026, when the NGCB filed a civil enforcement action in Carson City District Court seeking to stop Kalshi from offering what it characterized as unlicensed wagering under Nevada law.
On March 20, the court issued a temporary restraining order in favor of the regulator, limiting Kalshi’s ability to accept new positions on certain event contracts from Nevada users while allowing existing positions to be closed out.
Following that order, Kalshi notified Nevada users that sports, entertainment, and election markets were restricted in the state, though other categories such as crypto, weather, and broader world events remained available.
In April 2026, the court converted the temporary restraining order into a preliminary injunction, finding that sports, election, and entertainment event contracts were sufficiently similar to gambling under Nevada law. The injunction prohibited Kalshi from offering or facilitating:
- Sports-related event contracts, including propositions and parlays tied to sporting outcomes
- Election-related event contracts
- Entertainment-related event contracts
The court also ordered Kalshi to implement geolocation measures by early May 2026 to prevent Nevada users from accessing the restricted markets.
A subsequent amended injunction issued in mid-May further clarified compliance requirements, reinforcing the obligation to block access from Nevada users.
Nevada says investigators accessed restricted contracts
The NGCB now contends that Kalshi’s geofencing efforts are insufficient and have not effectively prevented Nevada users from accessing restricted markets.
According to the regulator, its investigators were still able to access and purchase prohibited event contracts while physically located in Nevada, even after the injunction took effect.
The board also argues that Kalshi’s compliance approach is flawed because it relies primarily on an in-house geolocation system that depends on IP-based detection. Regulators have described this method as unreliable for state-level enforcement and argue that commercially available geolocation systems would provide stronger compliance guarantees.
The NGCB further alleges that Kalshi’s internal solution involved comparatively limited investment and testing, which the board argues demonstrates inadequate effort to comply with a binding court order.
In its public statement, the NGCB said Kalshi has “not complied with the court’s order requiring geofencing” and asked the court to impose substantial penalties for ongoing violations.
What Nevada law requires for a contempt finding
Under Nevada Revised Statute § 22.010(3), contempt of court includes “disobedience or resistance to any lawful writ, order, rule or process issued by the court.”
To establish contempt, courts generally must find that:
- The underlying order was clear, specific, and unambiguous; and
- The alleged violator failed to comply with its terms.
The NGCB argues that Kalshi’s continued accessibility to Nevada users demonstrates noncompliance with a clear court directive.
However, the amended injunction did not specify the precise technical methods Kalshi must use to enforce geofencing, leaving room for dispute over what constitutes “reasonable” compliance.
Kalshi expected to challenge specificity of court order
According to news by Legal Sports Report, Kalshi is expected to argue that the injunction does not require any specific geolocation vendor, method, or level of expenditure, and therefore its internal compliance system satisfies the court’s order.
The company may also contend that:
- The order does not mandate third-party geolocation services or multi-layer verification systems
- The injunction does not define what constitutes “sufficient” geofencing technology
- Any alleged violations may result from users circumventing location controls rather than intentional noncompliance
Kalshi has previously suggested that robust geolocation enforcement can be costly and complex, potentially requiring multi-system verification and significant ongoing investment.
The company may also argue that it attempted to cooperate with regulators in identifying alleged violations but did not receive sufficient detail to diagnose or resolve specific access incidents.
National legal fight over prediction markets intensifies
The dispute is part of a broader national legal battle over whether prediction market platforms such as Kalshi fall under state gambling laws or federal derivatives regulation.
Kalshi maintains that its event contracts are federally regulated financial instruments under the Commodity Futures Trading Commission (CFTC). Nevada regulators, however, argue that sports and similar contracts function as unlicensed wagering and must be subject to state gaming regulation.
Recent court activity across multiple states suggests continued fragmentation in how prediction markets are treated under US law, with courts reaching differing conclusions depending on jurisdiction and statutory interpretation.
