Kalshi ‘Ready to Defend’ Prediction Markets in Massachusetts Lawsuit Over Unlicensed Sports Betting

Prediction market pioneer Kalshi has made it clear: the company is prepared to defend its innovative platform amid a new lawsuit from Massachusetts regulators, who allege that Kalshi’s sports contracts constitute illegal, unlicensed betting for residents of the state. Promising to fight outdated legal frameworks, Kalshi argues that prediction markets are a critical 21st-century financial innovation that deserve broad access for all Americans.

Lawsuit Targets Sports-Powered Prediction Contracts

Filed in Suffolk County Superior Court, Massachusetts’ lawsuit asserts that Kalshi is disguising sports wagering as “event contracts” binary options that allow users to bet on the outcome of real-world events. The filing points out that between February and May 2025, more than 75% of Kalshi’s trading volume stemmed from sports wagers, and that the platform generated even more betting activity than licensed operators like DraftKings and FanDuel in that period.

State officials, including Attorney General Andrea Joy Campbell, highlight public health risks from unregulated wagering, including addiction and financial harm, and call for strict licensing and consumer protections. The lawsuit seeks an injunction to halt Kalshi’s sports prediction contracts until the case is resolved, as well as damages and civil penalties.

Kalshi’s Response: Innovation Over Outdated Laws

Kalshi disputes the allegations, maintaining that the platform is federally-regulated by the Commodity Futures Trading Commission (CFTC) not subject to state-level gambling oversight. A company spokesperson told Cointelegraph and CNBC:

“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with Kalshi as many other states have done, Massachusetts is trying to block Kalshi’s innovations by relying on outdated laws and ideas. 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.”

Kalshi also emphasizes the transparency and fairness of its marketplace, allowing users nationwide to trade contracts not just on sports, but entertainment, politics, and economic events.

Federal vs. State Regulation: The Legal Battle Intensifies

This is not the first time Kalshi has encountered regulatory hurdles. The company has previously received cease-and-desist orders from at least seven states including Arizona, Ohio, Illinois, and Montana over alleged unlicensed gaming, and fought those orders in federal court. Kalshi claims federal authority should override state action, and earlier federal rulings have backed the platform’s arguments against regulator interference.

Currently, Kalshi’s board includes former CFTC commissioner Brian Quintenz, recently nominated to lead the agency by President Trump a sign of growing federal recognition for prediction markets.

Industry Moves: Polymarket Prepares US Relaunch

The legal confrontation comes as blockchain-based rival Polymarket reportedly prepares to launch in the US, with CEO Shayne Coplan claiming CFTC approval for live operations and sources suggesting a huge valuation spike from $1 billion to as much as $10 billion. As institutional interest in prediction markets grows, regulatory clarity and legal precedent will shape the next era of sports and event-based trading in America.

Key Issues and Implications

• Kalshi’s volume: Over $1 billion in sports bets, with 3.4 million contracts traded in early 2025.
• Legal risk: Massachusetts asserts that Kalshi’s contracts violate its gambling laws and lack responsible gaming safeguards like age controls and player protection programs.
• Federal vs. state: The CFTC regulates prediction markets nationally, but most states have their own sports betting laws and licensing regimes.
• Future precedent: The outcome could determine U.S. access rules for digital prediction markets, sports trading, and DeFi wagering platforms.

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As Kalshi prepares for its latest courtroom fight, the case could set new boundaries for prediction market access and redefine how Americans trade forecasts on sports and beyond in the rapidly evolving digital economy.# Kalshi ‘Ready to Defend’ Prediction Markets Amid Massachusetts Lawsuit

Kalshi, a pioneer in federally regulated prediction markets, is gearing up for a major legal showdown as Massachusetts sues the platform over its sports event contracts, alleging they are unlicensed sports bets. The case could set a significant precedent for the future of decentralized prediction markets in the U.S., pitting federal fintech innovation against strict state gambling laws.

Massachusetts Sues Over “Disguised” Sports Betting

Filed in Suffolk County Superior Court, the Massachusetts lawsuit claims that Kalshi is offering unlicensed sports wagering by labeling their products as “event contracts.” Regulators argue these contracts enable residents to place money on binary event outcomes including standard sports wagers like point spreads, over-unders, and moneyline bets without obtaining a state gaming license, a process that costs incumbent platforms like DraftKings millions in fees and compliance.

Massachusetts Attorney General Andrea Joy Campbell stated:

“Sports wagering comes with significant risk of addiction and financial loss and must be strictly regulated to mitigate public health consequences.”

According to the lawsuit, over 75% of Kalshi’s trading volume since March 2025 was derived from sports wagers, exceeding legal volumes reported by industry leaders like FanDuel and DraftKings. The lawsuit seeks to halt Kalshi’s Massachusetts activities and impose financial penalties.

Kalshi’s Defense: Innovation, CFTC Authority, and Federal Preemption

Kalshi’s response is defiant. The company argues that, as a federally regulated platform under the Commodity Futures Trading Commission (CFTC), it is not subject to individual state gambling restrictions.

“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. Prediction markets are a critical innovation of the 21st century, and all Americans should be able to access them. We stand ready to defend this technology once again in court,” a Kalshi spokesperson said.

Kalshi has previously resisted cease-and-desist actions from states like Arizona, Montana, Ohio, and Illinois, having seen multiple federal courts side in its favor regarding CFTC preemption over state laws.

The Prediction Markets Boom: Polymarket Eyes U.S. Return

This legal battle comes as blockchain-based prediction platform Polymarket is preparing to relaunch in the US after a high-profile CFTC clearance. Industry reports suggest Polymarket’s valuation could reach as high as $10 billion, underlining massive investor demand and the sector’s potential to challenge traditional betting and financial derivatives.

Industry, Access, and Regulatory Stakes

• $1B+ in sports contracts: Kalshi’s sports-related trading outpaces some licensed sportsbooks.
• Consumer protections: Massachusetts alleges that Kalshi sidesteps age checks and responsible gambling tools mandated for state licensees, allowing bets by users as young as 18.
• Nationwide impact: Federal rulings in favor of Kalshi could reshape the sports trading landscape, cementing prediction markets as mainstream financial products rather than niche wagers.

As prediction markets move further into the financial mainstream, the Kalshi-Massachusetts lawsuit could become a landmark case defining the boundaries of innovation, regulation, and user access in the next wave of digital betting and forecasting.