Platform insists prediction markets are innovation, not illegal betting
Prediction market platform Kalshi has pledged to fight a new lawsuit filed by the Commonwealth of Massachusetts, which accuses the company of offering unlicensed sports betting. The state’s regulators argue that Kalshi’s “event contracts” are a disguised form of gambling, while the firm maintains that its markets represent a new class of financial innovation.
The civil complaint, filed in Suffolk County Superior Court, claims that Kalshi is violating Massachusetts’ strict sports wagering laws by allowing residents to trade contracts tied to sports outcomes. The filing alleged that as of May 2025, more than three-quarters of Kalshi’s trading volume was linked to sports, surpassing even well-known betting operators like DraftKings and FanDuel.
“Kalshi is violating the Commonwealth’s strict sports wagering laws and regulations by offering unlicensed sports wagering to Massachusetts residents,” the lawsuit stated.
Kalshi pushes back with federal defense
In response, a Kalshi spokesperson said the company is “ready to defend” its business model in court. “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,” the spokesperson said.
Kalshi argues that its operations fall under federal oversight from the Commodity Futures Trading Commission (CFTC), not state-level gambling laws. “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with Kalshi as many other states have done, Massachusetts is trying to block Kalshi’s innovations by relying on outdated laws and ideas,” the spokesperson added.
Broader implications for prediction markets
Kalshi has faced regulatory pushback before, receiving cease-and-desist orders from Arizona, Montana, Ohio, and Illinois. The Massachusetts case could set a key precedent for how prediction markets are classified in the U.S.
Meanwhile, rival Polymarket is reportedly preparing a U.S. relaunch after receiving signals of approval from the CFTC. Industry observers suggest that these cases will determine whether prediction markets are treated as financial tools or gambling products.
For now, Kalshi says it remains committed to giving Americans access to what it calls a “critical innovation of the 21st century.”
Disclaimer
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