Massachusetts Sues Kalshi, Alleging Prediction Market is an Illegal Unlicensed Sportsbook
Massachusetts Attorney General Andrea Joy Campbell has filed a lawsuit against the prediction market platform Kalshi, accusing the company of operating as an unlicensed online sportsbook and violating state law. The lawsuit, filed in Suffolk Superior Court, seeks to halt Kalshi’s sports-related offerings in the state and represents one of the most aggressive enforcement actions yet taken against the burgeoning prediction market industry.
A Sportsbook in Disguise
At the heart of the attorney general’s complaint is the argument that Kalshi’s “event contracts,” particularly those based on sporting events, are functionally identical to the sports wagers offered by licensed sportsbooks.
“Kalshi disguises its sports wagering offerings as ‘event contracts’ offered on a ‘prediction market,’” the lawsuit states. “Kalshi’s sports-related event contracts are sports wagers under Massachusetts laws and regulated by the MGC.”
The suit alleges that by offering these products to Massachusetts residents without a license from the Massachusetts Gaming Commission (MGC), Kalshi is in direct violation of state law. “If Kalsi wants to be in the sports gaming business in Massachusetts, they must obtain a license and follow our laws,” Campbell said in a statement.
Bypassing Consumer Protections
The attorney general’s office also argues that by operating outside the state’s regulatory framework, Kalshi is bypassing a suite of critical consumer protections that are mandatory for all licensed operators.
These alleged failures include:
- Underage Access: The lawsuit claims Kalshi allows users between the ages of 18 and 21 to wager on its platform, while the legal age for online sports betting in Massachusetts is 21.
- Insufficient Responsible Gaming Tools: The complaint alleges that Kalshi’s responsible gaming tools, such as deposit and wager limits, “fall far short” of what licensed operators are legally required to provide.
The suit also takes aim at the design of the Kalshi platform, claiming it “employs behavioral design mechanisms drawn from gambling psychology” to encourage impulsive engagement and diminish the user’s perception of financial risk.
A Battle Over Jurisdiction
Kalshi has consistently maintained that its platform is a federally regulated exchange under the exclusive jurisdiction of the Commodity Futures Trading Commission (CFTC). The company argues that state-level attempts to regulate its products are an overreach of authority that threatens the stability of the national financial markets.
In a statement, a Kalshi spokesperson reiterated that the company offers a “federally-regulated nationwide market.”
However, the lawsuit from Massachusetts signals a growing and coordinated pushback from state regulators who are determined to assert their own authority over any activity they define as sports betting. The data cited in the complaint underscores the stakes of this battle. The attorney general’s office claims that in a recent three-month period, sports-related contracts accounted for approximately 70% of Kalshi’s trading volume.
The lawsuit seeks a court order to permanently enjoin Kalshi from offering sports wagers in Massachusetts without a license.
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