- The Massachusetts Attorney General filed a lawsuit against Kalshi for allegedly breaking state gambling laws.
- The complaint focuses on Kalshi‘s sports event contracts, which began in January 2025, claiming they require a state license.
- The lawsuit asks the court to stop Kalshi from offering sports prediction markets in Massachusetts without proper licensing and seeks monetary penalties.
- Kalshi says its platform is federally regulated, fair, and accuses the state of blocking innovation with outdated laws.
- The case highlights the growing debate over regulating prediction markets, especially those involving sports events.
The Massachusetts Attorney General, Andrea Joy Campbell, has filed a lawsuit against prediction market platform Kalshi, alleging the company has violated state gambling laws. The complaint claims that Kalshi‘s recently launched sports event contracts fit the definition of sports wagering and require a Massachusetts license.
In the court document, Campbell asks the court to bar Kalshi from operating sports prediction markets within the state without a license. The lawsuit also seeks financial and other remedies. Campbell stated, “if Klashi wants to be in the sports gaming business in Massachusetts, they must obtain a license. Sports wagering comes with significant risk of addiction and financial loss and must be strictly regulated to mitigate public health consequences.”
The report explained that Kalshi‘s sports contracts, which function as binary options (where outcomes are limited to two possibilities, often yes/no), operate similarly to offerings from licensed sports betting companies like FanDuel. The attorney general’s office also raised concerns about behavioral design features on Kalshi‘s website, such as displaying potential payouts in bright green text, potentially downplaying the risks associated with gambling. The lawsuit claims these design choices may encourage risky behavior.
A spokesperson for Kalshi provided a statement in response, saying, “Kalshi offers its users a fair, transparent, federally-regulated and nationwide marketplace. Rather than engage in dialogue with Kalshi as many other states have done, Massachusetts is trying to block Kalshi’s innovations by relying on outdated laws and ideas. Prediction markets are a critical innovation of the 21st century, and all Americans should be able to access them.” The company said it plans to defend its platform in court.
Prediction markets, which allow users to buy and sell contracts based on the outcomes of future events, have increased in popularity in recent years. Crypto-focused platforms such as Polymarket and firms like Kalshi have drawn attention, especially for contracts related to political and sports events. While Kalshi previously faced federal scrutiny—involving a legal dispute with the Commodity Futures Trading Commission (CFTC)—the regulator eventually dropped its case earlier this year.
Additional details in the lawsuit document, available for download here, allege that Kalshi designed its platform to “exploit award anticipation and diminish users’ perception of financial risk.” The lawsuit is currently pending in Massachusetts court.
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