Massachusetts Attorney General sues Kalshi over unlicensed sports betting operations

• Massachusetts filed a civil lawsuit against prediction market Kalshi, alleging the platform operates illegal sports wagering disguised as “event contracts” without proper state licensing
• Sports betting accounts for 70-75% of Kalshi’s trading volume, with the platform handling over £1 billion in sports wagers from 3.4 million bets between January and June 2025
• The state seeks a permanent injunction to stop Kalshi’s operations in Massachusetts whilst requesting damages and civil penalties for violations of gambling laws

Massachusetts Attorney General Andrea Joy Campbell has filed a civil lawsuit against prediction market platform Kalshi, alleging the company operates an unlicensed sports betting business that violates state gambling regulations.

The lawsuit, filed in Suffolk Superior Court on Friday, seeks to permanently block Kalshi from offering sports prediction markets in Massachusetts. The Commonwealth alleges that Kalshi disguises sports wagering as “event contracts,” which allow users to place binary “yes” or “no” wagers on sporting events.

According to the lawsuit, these contracts closely resemble traditional sports betting products offered by licensed operators, including moneyline contracts, point spread contracts, and over-under betting options.

State officials claim Kalshi handled more than £1 billion in sports bets from approximately 3.4 million wagers between January and June 2025. Sports contracts accounted for 70-75% of Kalshi’s trading volume during this period, exceeding the percentages recorded by licensed operators such as DraftKings and FanDuel.

“Sports wagering comes with significant risk of addiction and financial loss and must be strictly regulated to mitigate public health consequences,” said Attorney General Campbell in the official press release.

“This lawsuit will ensure that if Kalshi wants to be in the sports gaming business in Massachusetts, they must obtain a licence and follow our laws.”

The lawsuit highlights several compliance failures that distinguish Kalshi from licensed operators. The platform allows users aged 18-21 to place bets, whilst Massachusetts law requires sports betting participants to be at least 21 years old.

Additionally, Kalshi provides limited responsible gambling safeguards compared to licensed operators, lacking appropriate self-limiting options such as maximum deposits or maximum wagers.

Massachusetts Gaming Commission Chair Jordan Maynard expressed support for the legal action.

“Prediction market companies are expanding into sports wagering whilst neglecting age restrictions, player protection programmes, state taxes, and other consumer protections,” Maynard said. “My fellow commissioners and I appreciate the Attorney General’s efforts to enforce the law and hold these companies accountable to Massachusetts’ rigorous standards.”

Kalshi has indicated its intention to defend against the lawsuit, with a company spokesperson stating they are “ready to defend” their prediction markets in court. The company argues that Massachusetts is “trying to block Kalshi’s innovations by relying on outdated laws and ideas”.

The Massachusetts case marks the latest legal challenge for Kalshi, which has faced cease-and-desist orders from at least seven states over similar allegations. However, the company has successfully defended its operations in Nevada and New Jersey, where judges granted preliminary injunctions blocking enforcement actions.

As part of the lawsuit, Massachusetts has requested that the court order Kalshi to cease offering sports wagering in the state whilst litigation is pending. The state is also seeking monetary damages and civil penalties for alleged violations of gaming laws.

The legal battle comes as Kalshi experiences explosive growth in sports-related trading. The platform reported $441 million in NFL-related volume during the first four days of the 2025 season, with sports accounting for 95% of all trading activity. This volume rivals the platform’s activity during the 2024 US presidential election.

The outcome of this case could set important precedents for how prediction markets operate across state lines and whether federal regulatory approval from the Commodity Futures Trading Commission supersedes state gambling laws. Kalshi maintains that its federal oversight provides sufficient regulatory framework for its operations.