Massachusetts Is Suing Kalshi for Offering Sports Betting
Massachusetts Attorney General Andrea Campbell has filed a lawsuit against prediction market operator Kalshi, alleging that the company has been running an illegal sports betting business in the state. The case, filed in Suffolk County Superior Court on Friday, seeks to block Kalshi from continuing operations that the state says amount to unlicensed sports gambling.
LISTEN TO THIS ARTICLE:The complaint claims that Kalshi accepted more than $1 billion in wagers on sports events during the first half of 2025 without obtaining the necessary approvals to operate as a legal sportsbook. According to the filing, more than 75% of Kalshi's total trading volume is connected to sports event markets, a share that state regulators argue rivals or even surpasses that of licensed operators such as DraftKings and FanDuel, which are widely recognized as leaders in the sports betting industry.
Related: Kalshi Reports $2B Valuation Following Latest Funding RoundThe suit also outlines how Kalshi's platform allegedly mirrors the experience of online gambling operators. The complaint states that the company incorporates behavioral design elements drawn from gambling psychology and recently introduced a parlay product, a format long associated with sports betting.
The Attorney General's Office further noted that Kalshi markets its services as sports betting. This, it contends, demonstrates the company's intent to operate in the same way as licensed sportsbooks while avoiding regulation and taxation.
The legal action in Massachusetts follows increasing scrutiny of financial technology companies entering the sports wagering space under the guise of prediction markets. In March, the Massachusetts Secretary of the Commonwealth revealed it was examining Robinhood's offering of sports event contracts, raising similar questions about whether such platforms are effectively operating as unlicensed betting providers.
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Kalshi Takes Bold Steps to Test the Regulatory Waters
Kalshi's expansion into sports event contracts earlier this year has brought escalating regulatory challenges. In the months following the launch, multiple states issued cease-and-desist letters to the company, ordering it to halt operations that they deemed to constitute illegal gambling.
States that have taken such actions include Arizona, Illinois, Maryland, Montana, Nevada, New Jersey and Ohio. Each state's regulators raised concerns that Kalshi was blurring the line between financial trading and gambling by creating markets based on sports outcomes.
In response to those regulatory moves, Kalshi has filed lawsuits against agencies in Maryland, Nevada and New Jersey. The company is contesting the enforcement actions, and the cases are still pending in court.
Despite the legal battles, Kalshi's platform remains active in those states as litigation continues, placing the operator at the center of a broader national debate over the regulation of event-based financial contracts. The Massachusetts lawsuit adds further pressure on Kalshi as the company attempts to defend its business model in multiple jurisdictions.
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