Massachusetts has initiated legal proceedings against Kalshi, a predictions platform, alleging that it is operating sports gambling activities without the necessary licensing, masquerading under the framework of events contracts. Attorney General Andrea Joy Campbell emphasized the need for Kalshi to comply with state laws, stating, “If Kalshi wants to be in the sports gaming business in Massachusetts, they must obtain a license and follow our laws.” The state is seeking a court order to halt Kalshi’s offering of sports events contracts while the lawsuit is active.
The lawsuit highlights that events contracts are classified as a predictions market and are regulated by the Commodity Futures Trading Commission (CFTC). Kalshi has consistently contended in federal court that the CFTC’s jurisdiction takes precedence over state regulations. However, Massachusetts contends that the platform’s operations resemble those of a sportsbook far more than a lawful predictions market.
According to the lawsuit, a significant portion of Kalshi’s trading volume stems from sports wagers. Between late February and mid-May 2025, sports event wagers accounted for approximately 70% of Kalshi’s total trading volume, a figure that surged to 75% starting March 18, 2025, coinciding with the launch of single-game March Madness markets. The lawsuit asserts that Kalshi’s earnings from these sports wagers have reportedly surpassed those of well-established licensed sportsbooks such as DraftKings and FanDuel during the same period.
A Kalshi representative disclosed that approximately $439 million in wagers has been placed on NFL-related contracts thus far, raising concerns about the platform’s financial dealings in the realm of sports betting without regulatory oversight.
In a bid to fortify its stance, Kalshi is actively defending its model of sports prediction trades on a national scale. The company recently presented oral arguments before the 3rd Circuit Court of Appeals in response to a New Jersey initiative aimed at enforcing a cease-and-desist order against its operations. As this lawsuit unfolds, the implications for Kalshi and the broader landscape of sports betting regulation in the U.S. remain uncertain.
