Prediction market Kalshi is facing legal challenges in Massachusetts as Attorney General Andrea Joy Campbell has filed a lawsuit alleging that the company is violating state gambling laws. The lawsuit, filed on Friday, revolves around sports event contracts that Kalshi introduced in January 2025, which Campbell claims do not comply with the requirement for operators to be licensed for sports wagering.
In her filing, Campbell seeks a court order to prevent Kalshi from offering sports prediction markets in the state unless it acquires the necessary license. The lawsuit also calls for financial relief and other forms of remedy. The rise of prediction markets has gained traction in recent years, particularly among crypto-oriented companies like Polymarket and established firms like Kalshi, which have garnered public interest through questions related to major events, including elections.
While the Massachusetts lawsuit acknowledges Kalshi’s range of prediction markets, its primary focus is on betting tied to sports. The filing argues that the structure of Kalshi’s prediction markets, which are categorized as binary options, closely mirrors the offerings provided by licensed sports wagering operators. An example cited in the filing is FanDuel, illustrating the similarity in how both operate.
According to the lawsuit, Kalshi accepts wagers defined as “a sum of money or thing of value risked on an uncertain occurrence” concerning both amateur and professional sporting events by selling sporting event contracts. The document contends that these contracts fall under the definition of sports wagering as outlined in Massachusetts General Law.
A significant part of the claim highlights what the Attorney General’s office describes as tactics designed to attract potential bettors. The lawsuit notes that Kalshi’s platform employs techniques drawn from gambling psychology, featuring design choices that promote impulsive engagement and exploit the excitement of potential rewards while downplaying the risks involved. It points out that the website’s color scheme—bright green for possible payouts, contrasted with black for odds—may encourage high-risk transactions by emphasizing potential rewards over the associated risks.
In her statement, Campbell emphasized that if Kalshi intends to engage in the sports gaming market within Massachusetts, it must obtain an appropriate license. She underscored the inherent risks associated with sports wagering, including the potential for addiction and financial loss, stressing the need for stringent regulation to protect public health.
Responding to the lawsuit, a Kalshi spokesperson asserted that the company provides a fair, transparent, federally-regulated marketplace accessible nationwide. The spokesperson criticized Massachusetts for attempting to hinder innovation in the face of traditional regulations, arguing that prediction markets represent a significant advancement in the 21st century. Kalshi expressed confidence in its ability to defend its innovations in court, reiterating its commitment to pioneering this evolving technology.
