Massachusetts sues Kalshi alleging illegal sports gambling

Massachusetts Sues Kalshi Over Unlicensed Sports Gambling

The state of Massachusetts has filed a lawsuit against Kalshi, a predictions platform, alleging that it offers sports gambling without a license. The lawsuit, filed in state court, claims that Kalshi’s events contracts are essentially sports wagers, and the company must obtain a license to operate in the state. Massachusetts Attorney General Andrea Joy Campbell stated that if Kalshi wants to be in the sports gaming business in Massachusetts, it must follow the state’s laws and obtain a license.

Kalshi has argued that its events contracts are regulated by the Commodity Futures Trading Commission (CFTC) as a predictions market, and that the CFTC’s federal authority supersedes state regulators. However, Massachusetts argues that Kalshi is making more money from sports wagers than licensed sportsbooks, such as DraftKings and FanDuel. According to the lawsuit, sports event wagers comprised approximately 70% of Kalshi’s trading volume between February 25, 2025, and May 17, 2025, and increased to 75% from March 18, 2025 onwards.

The Rise of Sports Prediction Trades

Kalshi has been at the forefront of a national defense of sports prediction trades, arguing that its platform offers a unique form of trading that is distinct from traditional sports betting. The company has made oral arguments before the 3rd Circuit Court of Appeals in an appeal by the state of New Jersey, which was prevented from enforcing a cease and desist against Kalshi. A Kalshi spokesperson recently revealed that $439 million worth of wagers had been placed on NFL contracts to date, highlighting the growing popularity of sports prediction trades.

The lawsuit filed by Massachusetts is the latest development in an ongoing debate about the regulation of sports prediction trades. As the industry continues to evolve, it is likely that we will see more states taking action to clarify the rules and regulations surrounding these types of trades. For now, Kalshi remains committed to its position that its platform is regulated by the CFTC and that it is operating within the bounds of federal law.