Massachusetts has filed a lawsuit against Kalshi, accusing it of unlicensed sports betting. The company is citing CFTC regulation and preparing for trial.
Kalshi fights Massachusetts lawsuit over sports betting
American prediction market startup Kalshi said it will fight a lawsuit filed by the state of Massachusetts. Regulators accuse the company of offering sports betting under the guise of “event contracts.”
The lawsuit was filed in Suffolk County District Court on Friday. It alleges that more than three-quarters of Kalshi’s trading volume is on sporting events, more than industry giants DraftKings or FanDuel. Authorities say this violates the state’s strict gambling laws.
Kalshi has denied the allegations. “Prediction markets are a key innovation of the 21st century, and all Americans should have access to them. We are prepared to defend this technology in court,” a company spokesperson told Cointelegraph.
Jurisdictional Conflict
Kalshi insists that it is regulated federally by the Commodity Futures Trading Commission (CFTC), and therefore is not subject to state law. Massachusetts, however, believes that the company is operating illegally.
This is not the first time that Kalshi has clashed with local regulators: previously, Kalshi received cease-and-desist orders in Arizona, Montana, Ohio, and Illinois.
Competition with Polymarket
The lawsuit coincides with the preparation of a rival blockchain platform, Polymarket, to enter the US market. According to Business Insider, the company is negotiating a new round of financing that could more than triple its $1 billion valuation received in June. Some investors value Polymarket at as much as $10 billion.
Polymarket CEO Shane Coplan told X in early September that the CFTC had granted the company permission to operate in the US, adding: “Stay tuned.”
