Massachusetts Sues Kalshi Over Alleged Unlicensed Sports Betting, Platform Vows to Fight
Massachusetts Attorney General Andrea Joy Campbell filed a civil lawsuit towards prediction market platform Kalshi, alleging the corporate operates unlicensed sports activities betting disguised as “occasion contracts” in violation of state playing legal guidelines.
The Commonwealth seeks damages, civil penalties, and a everlasting injunction to cease Kalshi from accepting sports activities wagers with out correct licensing from the Massachusetts Gaming Commission.
The lawsuit filed in Suffolk Superior Court claims Kalshi processed over $1 billion in sports activities wagers from 3.4 million bets between January and June 2025.
Sports contracts comprised 70-75% of Kalshi’s buying and selling quantity, surpassing percentages recorded by licensed operators DraftKings and FanDuel throughout the identical interval.
Kalshi Accused of Bypassing Consumer Protections Through “Event Contract” Model
Massachusetts regulators allege Kalshi’s binary “sure or no” occasion contracts perform identically to conventional sports activities betting whereas circumventing state oversight.
The platform affords moneyline contracts, level spreads, over-under bets, and proposition wagers that mirror licensed operators’ choices.
The firm permits customers aged 18-21 to place bets regardless of Massachusetts requiring age 21 for sports activities wagering.
Kalshi supplies minimal accountable playing safeguards in contrast to licensed operators, providing no deposit limits or cooling-off durations till March 2025.
State officers observe Kalshi markets extensively by tv, social media, and partnerships with Robinhood.
The platform beforehand marketed itself as “The First Nationwide Legal Sports Betting Platform” earlier than shifting language to describe actions as “buying and selling” after receiving cease-and-desist orders from a number of states.
The Massachusetts Gaming Commission particularly requested Attorney General Campbell pursue enforcement motion.
Licensed operators pay $5 million for five-year licenses, plus annual charges of $1 million, whereas Kalshi operates with out state authorization, regardless of processing comparable wagering volumes.
Attorney General Campbell emphasised in a press release that sports activities wagering “comes with vital danger of habit and monetary loss and should be strictly regulated to mitigate public well being penalties.”
The submitting requests a court docket order for Kalshi to stop Massachusetts operations throughout litigation.
Federal vs State Jurisdiction Battle Intensifies Across Multiple States
Kalshi argues its operations fall below Commodity Futures Trading Commission oversight fairly than state playing regulation.
The firm previously sued Nevada and New Jersey gaming regulators, claiming federal authority preempts state enforcement actions.
Federal courts sided with Kalshi in these circumstances, barring state regulators from intervening whereas litigation continues.
However, at the least seven states, together with Arizona, Montana, Ohio, and Illinois, have issued cease-and-desist orders concentrating on the platform’s sports activities choices.
Robinhood Derivatives filed similar lawsuits towards Nevada and New Jersey in August, claiming unfair therapy in contrast to Kalshi’s protected standing.
@RobinhoodApp has sued Nevada and New Jersey, accusing the states of unfairly blocking its entry into the sports activities occasion contracts.#Robinhood #Cryptohttps://t.co/y6qGcRa09C
— Cryptonews.com (@cryptonews) August 20, 2025
The buying and selling platform facilitates occasion contracts that choose Kalshi’s system whereas looking for equivalent federal preemption protections.
Kalshi co-founder Tarek Mansour said the corporate stands “prepared to defend” its know-how “as soon as once more in a court docket of regulation.”
The platform maintains that prediction markets signify “vital innovation” that every one Americans ought to have entry to.
Meanwhile, rival prediction market Polymarket prepares U.S. re-entry after CEO Shayne Coplan claimed CFTC approval.
Business Insider reports that Polymarket is looking for funding that might probably triple its $1 billion valuation to $10 billion.
Notably, for Kalshi, its fast progress trajectory provides complexity to the regulatory challenges it faces.
The platform processed $441 million in buying and selling quantity through the first 4 days of the 2025 NFL season, with almost $200 million on September 7 alone, which was one in every of its busiest durations because the 2024 presidential election.
The firm achieved $875 million in month-to-month quantity throughout August 2025, whereas reviews counsel Kalshi is approaching a brand new funding spherical, probably valuing it at $5 billion.
This would greater than double its $2 billion valuation from a June funding spherical led by Paradigm with participation from Sequoia and Multicoin Capital.
As it stands now, Massachusetts joins rising state-level enforcement efforts concentrating on platforms that course of billions in wagering quantity with out conventional sports activities betting licenses.
CFTC appearing Commissioner Caroline Pham introduced in February a shift away from “regulation by enforcement” towards fraud safety.
However, the company beforehand probed Super Bowl contracts supplied by each Kalshi and Crypto.com earlier than concluding investigations with out enforcement actions.
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