Massachusetts Sues Kalshi Over Alleged Sports Betting Violations

Prediction market platform Kalshi is facing a lawsuit from Massachusetts Attorney General Andrea Joy Campbell, who alleges the company is violating state gambling laws. The complaint, filed Friday, targets Kalshi’s newly launched sports event contracts, introduced in January 2025, claiming they fall under regulated sports wagering and require a state license.

According to the filing, Kalshi’s sports markets operate like products offered by licensed sportsbooks such as FanDuel. The contracts, structured as binary options, allow users to bet on the outcome of sporting events, which the attorney general argues constitutes “sports wagering” under Massachusetts law. The lawsuit seeks to block Kalshi from offering these markets in the state without proper licensing, while also requesting financial and other penalties.

The state highlighted concerns over Kalshi’s platform design, alleging it uses gambling psychology techniques to encourage impulsive betting. For example, possible payouts are displayed in bright green font, while risks appear in black, a design Massachusetts officials claim emphasizes reward over risk. Campbell said sports wagering must remain tightly regulated to prevent addiction and financial harm, adding, “If Kalshi wants to be in the sports gaming business in Massachusetts, they must obtain a license.”

Kalshi, which previously won a federal battle with the Commodity Futures Trading Commission (CFTC) over its business model, pushed back strongly. A spokesperson argued the company offers a “fair, transparent, federally regulated marketplace” and accused Massachusetts of relying on “outdated laws.” The firm insists prediction markets are a critical financial innovation and vowed to defend itself in court.

The lawsuit comes as prediction markets gain popularity, with platforms like Kalshi and Polymarket attracting retail interest for wagers on elections, economics, and sports. However, Massachusetts’ action underscores the regulatory hurdles prediction markets face as they blur the line between financial products and gambling.