Massachusetts accuses Kalshi of running illegal sports wagering operation

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By Nate Raymond

BOSTON (Reuters) – Massachusetts’ attorney general filed a lawsuit on Friday seeking to block the New York derivatives trading company Kalshi from operating its sports prediction platform in the state, alleging it was an illegal sports wagering business.

“Sports wagering comes with significant risk of addiction and financial loss and must be strictly regulated to mitigate public health consequences,” Massachusetts Attorney General Andrea Joy Campbell said in a statement.

Kalshi said in a statement that it stood ready to defend its product in court, saying that Massachusetts was “trying to block Kalshi’s innovations by relying on outdated laws and ideas.”

Gaming regulators in at least seven other states have issued cease-and-desist orders to Kalshi after concluding it was engaged in illegal gaming in their jurisdictions by offering sports event contracts.

Kalshi gives its users the opportunity to profit from predictions on events ranging from sports and entertainment to politics and the economy. Such contracts have exploded in popularity since the U.S. presidential election last year.

Campbell, a Democrat, alleged in a lawsuit filed in Suffolk County Superior Court in Boston that Kalshi was offering sports wagering under the guise of event contracts, allowing for bets on the likelihood that an event would occur.

She alleged that Kalshi was promoting its offerings on television and social media and allowing trading through platforms such as Robinhood without applying for the necessary license from the Massachusetts Gaming Commission.

Her lawsuit also alleged that Kalshi’s operations had bypassed state regulations designed to protect consumers, including a state law that sets the legal age for sports wagering online at 21. Kalshi allows users 18 or older to bet on its platform.

The lawsuit said Kalshi also “does little to warn bettors about the real risk of losing money given its absolute yes-or-no payout structure” and did not provide any self-limiting options to its platform’s users in Massachusetts.

(Reporting by Nate Raymond in Boston; Editing by Edmund Klamann and David Gregorio)