Massachusetts Sues Kalshi Gaming Over Illegal Betting Actions

Massachusetts Attorney General Andrea Campbell filed a lawsuit Friday accusing prediction market operator Kalshi of running an unlicensed sports betting platform and seeking to block its operations in the state. The complaint, lodged in Suffolk County Superior Court, alleges Kalshi processed more than $1 billion in sports wagers in the first half of 2025, with sports contracts making up more than 75% of its total volume. The filing describes the platform as “a digital gambling experience” that uses “behavioral design mechanisms drawn from gambling psychology.”

Campbell’s office said Kalshi’s business model makes it more reliant on sports betting revenue than established industry leaders such as DraftKings and FanDuel, both licensed to operate in Massachusetts. The suit also cites Kalshi’s recent rollout of parlay-style products and its own advertising, which refers to sports betting.

State	Action	Status
Massachusetts	Lawsuit filed by AG	Pending
Maryland	Cease-and-desist / lawsuit	Appeal in progress
Nevada	Cease-and-desist / lawsuit	Preliminary injunction granted
New Jersey	Cease-and-desist / lawsuit	Preliminary injunction granted
California	Tribal lawsuit	Pending

 

Expanding State Scrutiny

Kalshi began offering sports event contracts earlier this year, triggering mounting regulatory action across the country. At least seven states — Arizona, Illinois, Maryland, Montana, Nevada, New Jersey and Ohio — issued cease-and-desist letters this spring. The Michigan Gaming Control Board launched a formal inquiry in April, while Tennessee’s Sports Wagering Council urged federal regulators to intervene.

The Commodity Futures Trading Commission (CFTC), which regulates prediction markets, has permitted sports event contracts in 2025. But an outgoing commissioner cautioned this summer that oversight remains weak. State-level regulators have expressed concern that sports prediction contracts blur the line between financial trading and gambling. The Ohio Casino Control Commission has warned licensed sportsbook operators that offering such products could jeopardize their approvals. Kalshi has challenged state regulators in court, filing lawsuits in Maryland, Nevada and New Jersey. Judges in Nevada and New Jersey granted preliminary injunctions allowing the company to continue operating while appeals proceed. In Maryland, a judge sided with regulators, though enforcement has been stayed pending appeal.

The company has also faced private litigation. Three California tribes sued in July, arguing that Kalshi violates tribal gaming rights under the Indian Gaming Regulatory Act. In August, Wisconsin’s Ho-Chunk Nation filed a separate suit.

 

Massachusetts’ lawsuit highlights growing state-level scrutiny of Kalshi, alleging the platform operates an unlicensed sports betting service despite federal approval for certain prediction markets.

 

Broader Context and the Future

Kalshi has scored some legal victories. Last October, the U.S. Court of Appeals for the D.C. Circuit ruled in its favor against the CFTC, clearing the way for it to list contracts on U.S. elections. Massachusetts’ action adds to the growing legal and regulatory pressure surrounding prediction markets, an emerging sector at the intersection of finance and gambling. The lawsuits reflect unresolved questions over how to classify event-based trading products — as investment contracts under federal oversight, or as gambling subject to state law.

Campbell has taken a public stance on the issue before. She joined 33 other state attorneys general last year in supporting New Jersey’s defense against Kalshi in federal appeals court. The Massachusetts lawsuit signals that, despite federal permission to list sports contracts, state authorities remain skeptical of prediction markets that resemble sportsbooks in practice. The outcome could help define the regulatory boundaries of a fast-growing but contentious industry.