Nevada seeks enforcement of court order against Kalshi as California ramps up legal efforts

The legal challenges surrounding Kalshi continue to grow, and two notable developments late last week came from Nevada and California, the biggest gaming state and the largest US state by population, respectively.

Last Friday, the Nevada Gaming Control Board announced it has requested the state’s First Judicial District Court to hold Kalshi in contempt of court for failing to comply with its order to restrict users located in Nevada from trading sports, entertainment and election contracts on the platform.

The Nevada state court, which remains the only court to issue an order blocking Kalshi from trading in a US jurisdiction, first issued the preliminary order 3 April. This ruling was then affirmed through an amended order 18 May — Kalshi has still not complied with the amended order, the board alleged. The state is pushing for penalties of “at least $120,000 each day” that Kalshi remains non-compliant, according to court filings.

Kalshi initially responded to the order by blocking users whose IP addresses are located in Nevada, but that is a surface-level measure that is not as comprehensive as geofencing, which restricts the entire jurisdiction itself rather than users. Geofencing is common practice for the US gambling industry, but prediction markets like Kalshi have balked at implementing the technology both for cost reasons and federal regulatory requirements that mandate open access to all US users.

According to court filings, Kalshi is relying on “a homegrown ‘solution’ that relies only on internet protocol (IP) addresses” and costs $190,000. IP addresses, the filing adds, “are notoriously unreliable for determining users’ locations”. Kalshi is “flagrantly” flouting the order and has created “an intolerable state of affairs”, the state alleges.

“We will continue to vigorously enforce Nevada law to safeguard gaming in our state,” NGCB Chairman Mike Dreitzer said in a statement.

California increasingly active against Kalshi

On the same day as the NGCB announcement, California Attorney General Rob Bonta’s office announced that the Golden State has joined a coalition of 37 attorneys general in filing an amicus brief against Kalshi in its suit against the state of Ohio. That case is being heard by the US Court of Appeals for the Sixth Circuit.

The AG’s office said the Ohio amicus brief is the seventh time it has joined multistate efforts against prediction markets like Kalshi. California joined a nearly identical brief in Kalshi’s suit versus the state of Tennessee two weeks ago, and that case has been consolidated with Ohio’s before the Sixth Circuit. That said, last week’s brief was the first time any of the filings have been announced publicly, which could be an indication that enforcement efforts are ramping up.

“This filing is representative of our bipartisan commitment to protecting state regulatory authority over illegal, unregulated gambling operations,” Bonta said in a statement. “Prediction markets cannot use federal loopholes to bypass state consumer protection, sports gaming, and gambling laws. By joining this brief, we are standing firmly with Ohio and our state partners to ensure that federal commodities laws are not weaponized to evade state laws, fuel gambling addiction, and undermine state revenue.”

To this point, California has not entered into direct litigation with prediction markets. But three state gaming tribes — Blue Lake Rancheria, Chicken Ranch Rancheria and Picayune Rancheria — sued Kalshi last year, alleging violations of the federal Indian Gaming Regulatory Act. The tribes lost their bid for a preliminary injunction but an appeal is currently active under the Ninth Circuit Court of Appeals.

High stakes for Ford, Bonta

Aside from their respective states’ interests, the two figures leading the fights for Nevada and California have a lot at stake personally. In Nevada’s case, the charge is being led by Attorney General Aaron Ford, who is currently campaigning for governor. After winning the Democratic primary earlier this month, Ford will face off against Republican incumbent Joe Lombardo in November’s general election.

Ford is seeking to become Nevada’s first black governor, and will attempt to capitalise on a swell of midterm support for Democrats as Republicans’ approval ratings sputter in the wake of worsening economic conditions and rising costs related to the US-Iran war.

Gas prices in Nevada are the sixth-highest in the US, per AAA, and President Donald Trump’s volatile international relations have been cited as a factor in Las Vegas’ extended tourism slump. A win against prediction markets, which represent one of the biggest threats ever to Nevada’s casino industry, could be a big feather in Ford’s cap. On Kalshi, Ford currently has 59% odds to win in November, while traders on Polymarket give the Democratic nominee a 52% chance to prevail.

Kalshi and other gaming cases

Bonta, meanwhile, is seeking reelection this year, and has become increasingly involved in gaming matters. This includes the implementation of sweeping regulatory changes for state card rooms, the removal of betting machines at Santa Anita racetrack and an opinion declaring daily fantasy sports to be illegal in the state, in addition to the Kalshi briefs.

All of those actions have appeared to align Bonta with the state’s gaming tribes, which are incredibly influential and well-resourced. According to the National Indian Gaming Commission, tribal casinos in California and northern Nevada posted $12.1 billion in gross gaming revenue in fiscal year 2024, significantly more than any other region in the US.,

In a brief post on X, a Kalshi spokesperson wrote that the company complied with the relevant court order in Nevada.

“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,” Kalshi spokesperson Jacki McGavick wrote on her X account.