Two of the most consequential gaming jurisdictions in the United States moved against prediction market operator Kalshi on the same day last week. Nevada, the country’s largest gaming state, asked its First Judicial District Court to hold the company in contempt for ignoring an order to restrict in-state trading. California, the most populous state, signed onto a 37-attorney-general coalition backing Ohio in a separate appellate fight. The two actions, filed within hours of each other, point to a coordinated escalation against a platform that regulators argue is running unlicensed sports and event wagering under the cover of federal commodities law.
What the Twin Filings Mean for Operators
For executives tracking the prediction market sector, last week reframed the regulatory risk. The fight is no longer theoretical or confined to a single courtroom. Here is the strategic read.
- Daily penalty exposure is now real: Nevada is pushing for fines of at least $120,000 per day of non-compliance, a figure that compounds fast and changes the cost calculus for any operator weighing whether to fight or fold.
- IP blocking may not satisfy a court: Kalshi’s $190,000 in-house geolocation system relies on IP addresses, which the state’s filing calls “notoriously unreliable.” Regulators want full geofencing, the industry standard for licensed US gambling.
- The multistate brief signals organisation, not improvisation. California’s filing was the seventh such effort, but the first announced publicly.
- Tribal gaming interests are aligned with state AGs: California and northern Nevada tribal casinos posted $12.1 billion in gross gaming revenue in fiscal 2024, the highest of any US region, giving regulators a powerful and well-funded constituency.
- Federal preemption is the whole ballgame: Whether the Sixth Circuit accepts Kalshi’s argument that the Commodity Exchange Act overrides state gambling law will set the template for every pending case.
A Court Order, Twice Issued, Still Unmet
The Nevada Gaming Control Board’s contempt request traces back to a preliminary order issued 3 April, which the First Judicial District Court affirmed through an amended order on 18 May. The Nevada court remains the only one in the country to block Kalshi from trading in a US jurisdiction. And according to the board, the company still has not complied.
Kalshi responded by blocking users whose IP addresses sit inside Nevada. But that is a thinner measure than geofencing, which walls off the jurisdiction itself rather than chasing individual addresses. Prediction markets have resisted the technology on two grounds: cost, and federal rules they read as requiring open access to all US users. The state’s filing was blunt, accusing Kalshi of “flagrantly” flouting the order and creating “an intolerable state of affairs.”
“We will continue to vigorously enforce Nevada law to safeguard gaming in our state,” NGCB Chairman Mike Dreitzer said.
Kalshi disputes the premise. “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,” spokesperson Jacki McGavick wrote on X, adding that the company had complied with the relevant order. Which raises a harder question: if IP blocking and geofencing produce materially different outcomes, can both sides be describing the same compliance standard?
California Widens Its Front
On the same Friday, Attorney General Rob Bonta’s office confirmed California had joined a coalition of 37 attorneys general filing an amicus brief against Kalshi in its suit against Ohio, now before the US Court of Appeals for the Sixth Circuit. Two weeks earlier, California had signed a nearly identical brief in Kalshi’s case against Tennessee. The Sixth Circuit has consolidated the two.
“Prediction markets cannot use federal loopholes to bypass state consumer protection, sports gaming, and gambling laws,” Bonta said. He framed the effort as a “bipartisan commitment to protecting state regulatory authority over illegal, unregulated gambling operations” and warned against federal commodities law being “weaponized to evade state laws.”
California has not yet sued a prediction market platform such as Kalshi directly. The pressure has come from elsewhere. Three state gaming tribes, Blue Lake Rancheria, Chicken Ranch Rancheria and Picayune Rancheria, sued the company last year under the federal Indian Gaming Regulatory Act. They lost their bid for a preliminary injunction, and the appeal is now live before the Ninth Circuit.
The Politics Behind the Litigation
Strip away the legal mechanics and there are two campaigns running underneath these filings. In Nevada, the charge is led by Attorney General Aaron Ford, who is running for governor after winning the Democratic primary earlier this month. In November he faces Republican incumbent Joe Lombardo.
Ford is seeking to become Nevada’s first Black governor, and he is doing so against an unusual economic backdrop. Gas prices in the state rank sixth-highest in the country, per AAA, and Las Vegas tourism has slumped, with President Donald Trump’s foreign policy cited as a contributing factor. A win against prediction markets, which threaten the casino industry that defines Nevada’s economy, would be a useful credential. The markets themselves seem to like his odds: Kalshi traders give Ford a 59% chance in November, while Polymarket puts him at 52%.
Bonta, up for reelection, has spent the year deep in gaming policy. Beyond the Kalshi briefs, he has pushed sweeping changes for state card rooms, ordered betting machines removed from Santa Anita racetrack, and issued an opinion declaring daily fantasy sports unlawful in California. Each step has placed him alongside the state’s tribal operators, who are among the most influential and best-resourced interests in California politics.
What the Sixth Circuit Decides Next
The consolidated Ohio and Tennessee appeal is where the durable precedent gets made. State-by-state contempt fights can drain Kalshi’s resources, but they do not resolve the central legal question. If the Sixth Circuit holds that the Commodity Exchange Act preempts state gambling statutes, the multistate coalition loses its primary weapon. If it rules the other way, regulators gain a template they have already shown they are prepared to copy across jurisdictions.
The daily penalty clock in Nevada keeps running either way.
Frequently Asked Questions
Why does Nevada want Kalshi held in contempt?
The state alleges Kalshi failed to comply with a court order, first issued 3 April and amended 18 May, requiring it to restrict Nevada users from trading sports, entertainment and election contracts. The board is seeking penalties of at least $120,000 for each day of non-compliance.
What is the difference between IP blocking and geofencing?
IP blocking targets individual users based on their internet address, which can be inaccurate or circumvented. Geofencing restricts the entire jurisdiction and is the standard practice across licensed US gambling. Kalshi uses an IP-based system; Nevada wants the stricter approach.
Has California sued Kalshi?
Not directly. California has joined seven multistate amicus briefs against prediction markets, including the Ohio and Tennessee appeals. Separate litigation against Kalshi has come from three California gaming tribes under the Indian Gaming Regulatory Act.
What happens if the Sixth Circuit sides with Kalshi?
A ruling that federal commodities law preempts state gambling statutes would undercut the multistate enforcement strategy and strengthen prediction markets’ claim to operate nationwide without state licensing.
