Kalshi and NV Gaming Control Board spar over geolocation mandate 

“Nevada’s investigators broke federal law when they used false information to hunt for loopholes in our geofence,” Kalshi General Counsel Rick Heaslip said in a statement this weekend after the Nevada Gaming Control Board asked a judge to fine Kalshi $120,000 a day for failing to geofence would-be customers in Nevada. 

The state’s goal, Heaslip said “is not protecting consumers. It’s just a vindictive waste of taxpayer dollars at the bidding of casinos.”

The platform has been under court order since May to stop taking bets from those in Nevada on sports, elections, and entertainment-related matters, but has flouted judicial orders by accepting dozens of bets, according to a motion filed Friday by Attorney General Aaron Ford’s office, which represents the GCB. 

Regulators are asking a judge to fine the ubiquitous betting platform $120,000 a day, a sanction Kalshi agreed to in July when it pledged to stop accepting bets from within the state by Aug. 12. 

Kalshi contends it complied, but that GCB agents placed bets using fake addresses to thwart the platform’s geofencing mechanism. 

In a letter Friday to the GCB, Kalshi’s attorney Andrew Porter notes the platform engaged the services of a vendor, GeoComply, at the request of Nevada regulators, and made good on its agreement to geofence bettors in Nevada by Aug. 12.

The GCB says Kalshi informed it on Aug. 11 that the geolocation function would not be active on mobile accounts until users updated their apps and said it was implementing a requirement that they do so. Kalshi, the state says, notified the GCB on August 12 that geofencing was activated on mobile devices. 

Despite Kalshi’s assurance, the GCB says that state investigators, using standard iPhones, were able to place nine bets on contracts that should have been prohibited.

When provided with details of the transactions by the GCB, Kalshi said the investigators were able to “trade” because their devices carried the previous version of Kalshi’s app, which was not subject to geofencing.  Additionally Kalshi acknowledged it had only required clients registered in Nevada to update their apps.  

Kalshi subsequently said it would require other users to update their apps in three to five days. 

Kalshi contends the GCB investigators violated federal law by falsifying their location, “and, in at least one instance, actively worked to circumvent the Kalshi restrictions that blocked the investigator from trading.”

The company did not elaborate when contacted by the Current. 

“Kalshi’s accusations are baseless, and they cannot obscure the fact that Kalshi missed its agreed-upon deadline to comply with Nevada law,” the GCB said in a statement. “Kalshi’s consistent failures to comply with the court’s orders left the Board with no choice but to advise the court of Kalshi’s noncompliance.”

Kalshi, according to court documents, has ignored several court orders to stop taking bets from individuals in Nevada. 

At a June hearing to show cause why it should not be held in contempt, Kalshi said it had spent $190,000 on internal compliance efforts to track locations, “a notoriously unreliable way to determine users‘ location,” the state wrote in its motion.  

A Kalshi executive had previously sworn in federal court that effective geolocation could cost the company “tens of millions of dollars” a year, according to the state’s motion.

Kalshi was also ordered by a Michigan court to stop taking bets in that state by Aug. 12 or pay a daily fine of $500,000. However, geofencing “system in Michigan only works after an app update that is not required,” according to an InGame reporter, who “was able to place bets on sporting events from Michigan, using an account registered to an Indiana address.”

Last week, a Washington state judge ordered Kalshi to curtail its operations and impose geolocation compliance measures.