The Kalshi Nevada geofencing fine dispute sharpened this week as state gaming regulators asked a court to impose a $120,000-per-day penalty on the prediction market platform, alleging it continued to offer prohibited event contracts after a court-ordered compliance deadline. Kalshi says the trades that regulators cite were made by investigators who broke federal law to complete them.
What the Nevada Gaming Control Board Is Alleging
Prediction markets (platforms where users buy contracts on the outcome of real-world events, from elections to sports results) have been a regulatory flashpoint in the United States, and Kalshi has been at the centre of it. The Nevada Gaming Control Board (NGCB) issued a cease-and-desist letter to Kalshi on 4 March 2025, and Kalshi responded by filing suit in federal district court on 28 March 2025, seeking to block enforcement of Nevada gaming law.
That federal case did not go Kalshi’s way. The district court dissolved Kalshi’s preliminary injunction on 25 November 2025. A state court then stepped in, enjoining Kalshi from offering prohibited event contracts in Nevada on 3 April 2026.
In July 2026, Kalshi agreed to deploy geofencing technology from GeoComply (software that uses location data to block users in a specified area) and to halt Nevada trading by 12 August 2026. The NGCB says its investigators could still access the platform and execute trades after that deadline, covering sports, election and entertainment contracts through mobile phones, including through an older app version that the geoblocking did not cover.
If the court accepts the state’s position and counts the alleged violation through 17 August, the proposed penalty reaches roughly $600,000 (five days at $120,000 per day). No final amount has been imposed.
In a court filing, the NGCB said Kalshi ‘has profited enormously from its continued violations of Nevada law.’
Kalshi Nevada Geofencing Fine: The Company’s Rebuttal
Kalshi does not accept that its compliance failed. In a letter to the board, the company’s attorneys said investigators ‘were able to place a trade because they had violated federal law by misrepresenting their residence to Kalshi, and, in at least one instance, actively worked to circumvent the Kalshi restrictions that blocked the investigator from trading.’
The enforcement dispute, then, turns on method: Nevada says its investigators proved access was still possible from within the state; Kalshi says those trades required testers to supply false information or actively bypass restrictions, and that compliant users could not have done the same.
This is the second time the NGCB has sought contempt-style sanctions against Kalshi. The board filed its first contempt motion on 4 June 2026, following a 18 May 2026 court order requiring Kalshi to geofence its operations. That earlier request also named a $120,000-per-day penalty. The judge has not imposed the daily fine in either round.
The Ninth Circuit Ruling Changes the Wider Picture
While the contempt dispute works through the courts, the bigger legal question has just received a definitive answer, at least for now. On 28 August 2026, the Ninth Circuit issued a 3-0 ruling against Kalshi, Crypto.com, and Robinhood, concluding that sports-related event contracts are not federally regulated derivatives and that Nevada can apply its gaming laws to Kalshi’s sports contracts.
That ruling creates a circuit split: the Ninth Circuit’s reasoning directly rejects the logic behind Kalshi’s earlier win in the Third Circuit, which had taken a different view on whether federal commodities law supersedes state gaming regulation. According to Yahoo Finance, that divide between two federal appeals courts raises the prospect of the case reaching the US Supreme Court.
CNBC reported that the Ninth Circuit also ruled against Robinhood’s request for injunctive relief. Kalshi, for its part, says it will seek further review of the decision, according to ESPN, and in the meantime has blocked sports, entertainment and elections contracts for users in Nevada.
For investors watching the prediction market sector, two tracks are now running simultaneously. The state court is deciding whether Kalshi violated the existing injunction and what, if any, penalty should follow. The Supreme Court could yet decide whether any state can impose those rules in the first place. The outcome of any appeal will set the terms under which prediction market platforms can operate across the entire country, which is the number that ultimately matters for their commercial future.
