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Read Full BioMassachusetts Attorney General (AG) Andrea Joy Campbell has filed a lawsuit against Kalshi over claims that the platform is running an unlicensed sports betting platform.
In a statement on the state’s official site, Campbell said: “Sports wagering comes with significant risk of addiction and financial loss and must be strictly regulated to mitigate public health consequences.”
She went on to add: “This lawsuit will ensure that if Kalshi wants to be in the sports gaming business in Massachusetts, they must obtain a license and follow our laws.”
The AG is requesting that the court order Kalshi to cease offering sports wagering in Massachusetts while the lawsuit is pending.
The lawsuit is backed by the Massachusetts Gaming Commission (MGC). MGC Chair Jordan Maynard offered his support, stating: “My fellow commissioners and I appreciate the Attorney General’s efforts to enforce the law and hold these companies accountable to Massachusetts’ rigorous standards.”
Kalshi Criticizes Action as Relying on Outdated Laws & Ideas
When contacted for comment, a Kalshi spokesperson told Casino Beats: “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with Kalshi as many other states have done, Massachusetts is trying to block Kalshi’s innovations by relying on outdated laws and ideas.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. We are proud to be the company that has pioneered this technology and stand ready to defend it once again in a court of law.”
Kalshi has been ramping up its sports markets for the new football season and traded over $300 million on the opening weekend.
In May, over three-quarters of its trading was on sports markets, which the lawsuit notes is more than leading sportsbooks FanDuel and DraftKings. With the NFL season now in full swing, sports are even more dominant on the platform.
Lawsuit Claims Markets are Disguised Sports Wagering
The lawsuit, however, argues that the markets are disguised as sports wagering. It states: “Kalshi’s wagers allow a bet on whether a sports-related occurrence will happen. The bettor wins money if they guess correctly and forfeits the wagered cash if they guess incorrectly.”
It goes on to say: “Kalshi’s sports-related event contracts are sports wagers under Massachusetts laws and regulated by the MGC.”
Kalshi claims that the Commodity Futures Trading Commission (CFTC) has exclusive jurisdiction over its activity. As this is a federal organization, it preempts any state regulations, which the company argues makes its markets fair and legal.
Status of Kalshi’s Ongoing Court Battles
Kalshi is involved in three major court battles in Maryland, New Jersey, and Nevada. In these cases, Kalshi filed its own lawsuits against state regulators following cease-and-desist letters. Currently, the status of the cases is as follows:
- Nevada – Kalshi won an injunction to allow it to continue operating, but a judge rejected its motion to dismiss a process of discovery. The discovery process will begin with further investigation into Kalshi’s operations.
- New Jersey – Kalshi also won an injunction. Both sides made new oral arguments on Wednesday last week, with Kalshi deemed to have come out on top. The case awaits any definitive judgments.
- Maryland – The state won its initial battle after a judge refused to grant Kalshi an injunction. Kalshi has appealed the decision, and it can continue operating while the appeal is pending.
In addition, four more states issued Kalshi cease-and-desist letters in April, but there have been no subsequent court cases. The states are Ohio, Arizona, Montana, and Illinois.
As well as challenges by state regulators, the company has been sued by tribal groups in California and Wisconsin. These cases also remain open.
The company appears undeterred by the increasing number of court challenges and is poised to continue expanding despite the ongoing legal uncertainty.
