Massachusetts Attorney General Alleges Prediction Market Kalshi Violating Gambling Laws

Prediction market Kalshi is violating Massachusetts’ state playing legal guidelines, its lawyer normal alleged in a lawsuit Friday.

Attorney General Andrea Joy Campbell alleged in a submitting that sports activities occasion contracts, which Kalshi launched in January 2025, violate the state’s sports activities wagering legal guidelines, which require operators to be licensed. Campbell is asking for a court docket to dam Kalshi from providing sports activities prediction markets within the state and not using a license, in addition to in search of financial and different reduction.

Prediction markets have grown in recognition over the previous few years, with crypto-focused firms like Polymarket and corporations like Kalshi seeing immense curiosity over questions reminiscent of who would win the final presidential election. While the Massachusetts submitting notes that Kalshi does provide these completely different classes of prediction markets, its lone cost is concentrated on the corporate’s sports-related bets.

The submitting mentioned Kalshi’s prediction markets, that are structured as binary choices, function the identical manner licensed sports activities wagering operators’ merchandise do, evaluating it to FanDuel for instance.

“Kalshi is in the business of accepting wagers, defined as ‘a sum of money or thing of value risked on an uncertain occurrence’ on amateur and professional sporting events in the form of selling sporting event contracts,” the submitting mentioned, including, “Kalshi’s sporting event contracts constitute sports wagering” as outlined by Massachusetts legal guidelines and relevant rules.

Kalshi had been by means of a prolonged authorized tussle on the federal stage when it battled with the Commodity Futures Trading Commission over the legality of its enterprise mannequin, however the regulator in the end backed down earlier this 12 months. Now, one among Kalshi’s board members, former CFTC commissioner Brian Quintenz, is President Donald Trump’s nominee to run the company.

A portion of the Massachusetts lawsuit factors to Kalshi actions the lawyer normal’s workplace alleges are designed to hook potential bettors.

“Kalshi’s platform employs behavioral design mechanisms drawn from gambling psychology, including features that encourage impulsive engagement, exploit award anticipation and diminish users’ perception of financial risk,” the submitting mentioned.

It pointed to Kalshi’s web site design, together with presenting potential payouts in “bright green font, a color that signals safety and correctness,” whereas odds had been offered in black font. “This interface design subtly encourages high-risk transactions by emphasizing reward while obscuring risk.”

Campbell mentioned “if Klashi wants to be in the sports gaming business in Massachusetts, they must obtain a license” in an announcement. “Sports wagering comes with significant risk of addiction and financial loss and must be strictly regulated to mitigate public health consequences.”

In an announcement, a Kalshi spokesperson mentioned, “Kalshi offers its users a fair, transparent, federally-regulated and nationwide marketplace. Rather than engage in dialogue with Kalshi as many other states have done, Massachusetts is trying to block Kalshi’s innovations by relying on outdated laws and ideas. Prediction markets are a critical innovation of the 21st century, and all Americans should be able to access them. We are proud to be the company that has pioneered this technology and stand ready to defend it once again in a court of law.”