Lynnae is a journalist covering the intersection of technology, culture, and gambling. She has more than five years of experience as a writer and editor, with bylines at SlashGear and MakeUseOf. On the iGaming side,...
Read Full BioKalshi co-founder Luana Lopes Lara has issued a forceful public defense of the federally regulated prediction-market platform, calling a new class-action lawsuit “a pure smear campaign” driven by “entrenched interests” opposed to the sector’s growth.
The lawsuit, filed on Wednesday in the Southern District of New York, alleges that Kalshi “duped” consumers into believing that its sports markets were “legal in 50 states” and that bettors were wagering against other consumers, when in reality, they were placing bets against Kalshi itself, through an affiliate.
This is the second major class-action lawsuit Kalshi has faced in recent weeks. A separate lawsuit filed in October alleged that Kalshi’s event contracts amounted to illegal sports betting; that case is ongoing.
In a lengthy post on X Friday morning, Lara accused an unnamed competitor of paying social-media accounts to “amplify a baseless lawsuit,” adding that critics are spreading “false narratives” about how Kalshi operates.
She added that Kalshi “will address [the lawsuit] in court” and argued that any large consumer-facing company eventually faces claims it considers meritless.
Industry Reaction to Class Action Lawsuit
Word of the latest lawsuit against Kalshi spread quickly on X, with users noticing that Polymarket’s official account had “liked” a post about the filing. It was a small but widely screenshotted moment that had users wondering whether it signaled an intensifying rivalry between the two prediction platforms.
RAWSALERTS, an X account with over a million followers and a verified Polymarket affiliate, was also among the first to amplify the lawsuit’s claims. Lara cited the account’s post as evidence of a coordinated campaign by Kalshi competitors. CasinoBeats has reached out to Polymarket for comment and will update if a response is received.
In her post on X, Lara called out Kalshi’s competitors, saying: “What’s disappointing is that other prediction markets are also doing it, even though it hurts everyone in the industry… I am posting this with the hope that the industry matures beyond this destructive infighting and decides to work together to achieve the full potential of prediction markets.”
She added that she was “not posting to create another X flare up,” and acknowledged that Kalshi has “had its share of the blame in the past.”
Kalshi Insists It’s a Peer-to-Peer Exchange, Not the House
In the statement on X, Lara restated the company’s stance about its structure, saying, “Kalshi is an exchange. It’s peer-to-peer, and there is no house.” She went on to say that anyone, whether an individual or entity, can place orders and trade against anyone else.
The post claims that Kalshi uses market makers to “bootstrap liquidity,” and its affiliate, Kalshi Trading, is just one of many participants, receiving “no preferential access or treatment,” operating with a separate team, and accounting for less than 6% of sports-market-making volume this month.
Lara’s pushback is a rare rhetorical escalation for a company that has, until now, largely confined its battles to court filings and regulatory briefs.
New Jersey & Ohio Take Action After Nevada Ruling
The public defense comes as state regulators in New Jersey and Ohio move quickly to leverage a recent Nevada ruling that undercuts Kalshi’s long-standing argument that its products are not gambling.
Kalshi is registered with the U.S. Commodity Futures Trading Commission as a Designated Contract Market and argues that its event contracts function like derivatives, not wagers, thereby placing them under federal, rather than state, oversight.
However, federal district court Judge Andrew Gordon rejected that argument this week, dissolving a preliminary injunction that had shielded Kalshi from enforcement in Nevada and ruling that sports event contracts can still fall under state gambling law. Judge Gordon’s decision opened the door for other jurisdictions to use Nevada’s reasoning in their own disputes with the company.
New Jersey and Ohio wasted no time doing just that. Sports betting and gaming lawyer Daniel Wallach, who shared New Jersey and Ohio filings on X, pointed out that both states had moved quickly to cite the Nevada ruling as supplemental authority in their actions against Kalshi.
In a letter submitted to the U.S. Court of Appeals for the Third Circuit, the New Jersey Attorney General’s office says Nevada’s ruling, “…makes the district court here the only court in the country to accept Kalshi’s attempted federalization of the multi-billion-dollar gaming industry.” The letter ends with, “sports-related event contracts” are “sports wagers” and that “everyone who sees them knows it.”
Ohio filed a notice in federal court pointing to the Nevada ruling as supplemental authority, highlighting the court’s conclusion that Kalshi’s contracts “are not swaps” and warning that CFTC-regulated exchanges “should not become sports gambling venues.”
Prediction Markets Put to the Test
Kalshi is now staring down two class-action lawsuits, a critical Nevada ruling, and new actions by New Jersey and Ohio. To say the prediction market is facing pressure on all fronts would be an understatement.
For prediction markets in general, the outcomes in these cases may determine whether being registered with a federal regulator is sufficient to keep event contracts out of the gambling bucket or if state authorities will win the right to treat them like sports bets.
Lara’s post on X signals that Kalshi has no intention of backing down and intends to fight the push to classify its contracts as sports wagers in the courtroom and in the court of public opinion.
The next set of rulings in New Jersey, Ohio, and beyond will help determine whether Kalshi and other prediction markets continue to operate in what is widely viewed as a gambling loophole, are treated as financial exchanges with quirks, or are ultimately deemed the latest iteration of unlicensed sports betting by another name.
