Key Takeaways
Contents
- On March 20, a Nevada court imposed a 14-day temporary restraining order preventing Kalshi from providing sports, entertainment, and election betting contracts to state residents
- Reports indicate Nevada bettors circumvented these restrictions by updating their registered account addresses to other states without facing verification checks
- The platform relies on user-provided registration information rather than real-time geolocation systems, raising questions about compliance with court mandates
- On March 17, Arizona prosecutors filed 20 criminal misdemeanor charges against Kalshi, marking the first criminal action taken by a state against the prediction market operator
- A court session scheduled for April 3 will determine if Nevada will impose a permanent ban, potentially influencing regulatory actions nationwide
The prediction market operator Kalshi is under scrutiny regarding its compliance with a Nevada court directive designed to prevent state residents from accessing sports and entertainment betting options.
On March 20, Nevada’s state court implemented a temporary restraining order commanding Kalshi to cease providing sports, entertainment, and election-based contracts to anyone physically located within Nevada for a two-week period.
Initial reports suggested the platform complied swiftly. However, evidence quickly emerged indicating that users within the state maintained access to prohibited markets.
The Loophole Bettors Are Exploiting
Gambling Insider reported that Nevada residents successfully placed sports wagers through Kalshi’s application as late as March 26. One individual explained to the publication that they circumvented the blockade by simply updating their account’s registered address to a location outside Nevada.
Following the address modification, no further identity verification or location confirmation was requested. The bettor subsequently wagered on a Major League Baseball contest.
Gaming attorney Daniel Wallach noted on X that should Kalshi be found in violation of the restraining order, the company could face contempt proceedings.
The court’s restraining order explicitly restricts activity occurring “in Nevada,” indicating it should apply based on a user’s actual physical presence, not merely the address listed on their account profile.
Kalshi has stated that geofencing systems—the real-time location verification technology employed by licensed sportsbooks—would be prohibitively expensive and operationally challenging to implement. The company instead appears to depend on addresses users provide during the registration process.
This methodology has created an enforcement vulnerability. Nevada resident Roger Gros, editor of Global Gaming Business, reported being prevented from trading while traveling in Arizona because his account still showed a Nevada address. Conversely, someone physically present in Nevada with an out-of-state address registered could trade without restriction.
Under most interpretations of the court directive, Kalshi should be blocking anyone physically present within Nevada’s borders, irrespective of their account’s listed address.
Kalshi declined to provide comment when contacted by Gambling Insider.
Criminal Prosecution in Arizona and Expanding State Opposition
Additional concerns exist regarding which specific markets Kalshi actually restricted. Las Vegas-based investigative journalist Brian Joseph discovered that while sports contracts appeared fully blocked, certain election and entertainment markets remained accessible under alternative category labels such as “mentions” or “politics.”
Nevada isn’t alone in pursuing legal action. On March 17, Arizona Attorney General Kris Mayes filed 20 misdemeanor criminal charges against Kalshi, representing the first instance of any state bringing criminal prosecution against the company.
The charges allege Kalshi operated an unlicensed gambling enterprise by accepting wagers on college athletic events, individual player statistics, and electoral outcomes. Kalshi has dismissed the charges as without merit.
Nevada’s case holds particular significance given the state’s position as America’s gambling epicenter. Some industry analysts have identified prediction markets as a contributing factor to diminishing sportsbook revenues. Nevada’s Super Bowl betting handle reached just $133.8 million this year, representing the lowest figure in more than ten years.
Members of Congress have additionally proposed legislative measures to completely prohibit sports-event contracts on prediction market platforms.
The 14-day temporary restraining order concludes on April 3. A court hearing is scheduled for that date to consider Nevada’s petition for a permanent injunction.
If approved, Nevada would establish itself as the first state to permanently prohibit Kalshi’s sports, entertainment, and election-related contracts. Regulatory authorities across other states are anticipated to closely monitor the proceedings.
Nevada could additionally contend during the hearing that Kalshi’s reliance on registration data rather than geolocation technology fails to satisfy the court order’s mandate to block access “in Nevada.”
