Kalshi cannot operate sports-prediction market in Massachusetts, judge rules

By Nate Raymond

BOSTON, Jan 20 (Reuters) – A Massachusetts judge on Tuesday ruled prediction-markets operator Kalshi cannot let state residents bet on sports through its online platform, after the state’s attorney general accused it of running afoul of gaming regulators.

Suffolk County Superior Court Judge Christopher Barry-Smith in Boston said he will issue a preliminary injunction at the request of Massachusetts Attorney General Andrea Joy Campbell that would prohibit Kalshi from allowing users in the state to use its platform to place financial bets on the outcomes of sporting events without a license.

The judge said Kalshi well understood that its business model of offering bets on sporting events would come into conflict with state enforcement regimes yet knowingly proceeded to operate in states like Massachusetts that require sports wagering entities to be licensed.

Barry-Smith said he planned to issue an injunction that would be forward-looking, which would minimize disruption to the company’s business while requiring it to comply with state law. He scheduled a Friday hearing to work out how the ban would be implemented and whether to put it on hold pending an appeal.

Kalshi declined to comment but has previously indicated it would appeal any injunction.

The New York-based company gives its users the opportunity to profit from predictions on events ranging from sports and entertainment to politics and the economy. It began offering sports events contracts nationally in January.

While Kalshi is engaged in litigation with several other states that have accused it of flouting their gaming laws by offering users the ability to bet on the outcomes of sporting events like football and basketball, Massachusetts was the first to seek an injunction to halt its operations.

Campbell, a Democrat, in a lawsuit filed in September argued that Kalshi was offering sports wagering under the guise of event contracts without seeking a license from the Massachusetts Gaming Commission.

Her office argued that while licensed gaming operators in the state are barred from offering sports wagering to anyone under 21, Kalshi was offering an addictive betting product without a license to consumers as young as 18 in high school.

Kalshi’s lawyers countered that state gaming laws like Massachusetts’ do not apply to its sports events contracts, which are subject instead to the U.S. Commodity Futures Trading Commission’s exclusive jurisdiction.

(Reporting by Nate Raymond in Boston; editing by Deepa Babington)