Legal Action Against Kalshi
Massachusetts Attorney General Andrea Joy Campbell has filed a lawsuit alleging that prediction market platform Kalshi is violating the state’s gambling laws. The complaint focuses on sports event contracts introduced by Kalshi in January 2025, which Campbell argues fall under the state’s sports wagering regulations requiring a license.
Details of the Complaint
According to the filing, Kalshi’s sports prediction markets are structured as binary options and operate similarly to licensed sports betting products, such as those offered by FanDuel. The AG’s office claims these contracts meet the legal definition of sports wagering in Massachusetts.
Background and Federal Context
Kalshi previously faced a lengthy legal battle with the Commodity Futures Trading Commission over its business model, but the CFTC dropped its appeal earlier this year. Notably, former CFTC commissioner Brian Quintenz, now on Kalshi’s board, has been nominated by President Donald Trump to lead the agency.
Concerns Over Platform Design
The lawsuit also alleges that Kalshi uses behavioral design tactics from gambling psychology to encourage impulsive betting, such as highlighting potential payouts in bright green font while displaying odds in black, which the AG’s office claims emphasizes rewards and downplays risks.
Statements from Both Sides
Campbell stated that if Kalshi wants to operate in Massachusetts’ sports gaming market, it must obtain a license, citing the risks of addiction and financial loss. In response, a Kalshi spokesperson defended the platform as a fair, transparent, federally regulated marketplace, accusing Massachusetts of relying on outdated laws to block innovation.
Fundfa View
This case highlights the growing tension between innovative prediction markets and state-level gambling regulations. The outcome could set a precedent for how such platforms operate across the U.S., especially in states with strict wagering laws.