Prediction market platform Kalshi is preparing to defend itself against a lawsuit filed by the Massachusetts Attorney General's office on September 12, 2025. The civil suit, filed in Suffolk County Superior Court, accuses Kalshi of offering unlicensed sports betting to Massachusetts residents by disguising sports wagering as "event contracts."
Massachusetts Attorney General Andrea Joy Campbell alleges that more than three-quarters of Kalshi's trading volume comes from sports-related contracts as of May 2025, a larger share than industry giants DraftKings or FanDuel. The lawsuit seeks to block Kalshi from offering sports-related prediction markets without a license and requests monetary relief.
Kalshi, which recently resolved a long regulatory battle with the Commodity Futures Trading Commission (CFTC), argues that its markets are federally regulated financial contracts rather than gambling products. "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," a Kalshi spokesperson stated, adding that prediction markets represent "a critical innovation of the 21st century."
The case highlights the tension between federal recognition of prediction markets and state-level gambling laws. Massachusetts regulators claim Kalshi employs behavioral design features borrowed from gambling psychology, including interface elements that highlight potential payouts in bright green font while displaying odds in black, which they argue "encourages high-risk transactions by emphasizing reward while obscuring risk."
The lawsuit comes as blockchain-powered prediction market Polymarket is reportedly preparing to launch in the US while seeking new funding that could value the company at up to $10 billion, significantly higher than its June 2025 valuation of $1 billion.
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