Massachusetts AG Sues Kalshi Over Alleged Illegal Sports Betting
The Massachusetts Attorney General’s office has initiated legal action against Kalshi, a prominent prediction market platform. The lawsuit alleges that the company’s “event contracts” constitute illegal sports wagers under state law. Attorney General Andrea Campbell filed the complaint in Suffolk Superior Court. She asserts that Kalshi is operating as an unlicensed sports betting entity within the Commonwealth.
The Core of the Kalshi Sports Betting Lawsuit
The Attorney General’s complaint specifically targets Kalshi’s offerings that allow users to bet on outcomes of various future events. Notably, the lawsuit highlights contracts tied to professional sports. These include the outcomes of NHL games and the performance of individual NFL players. The AG argues these offerings function identically to illegal parlays, prop bets, and over/under wagers. All such activities require a state license to operate legally.
Massachusetts law strictly controls who can offer sports wagering. Only licensed operators are permitted. These include land-based casinos such as Encore Boston Harbor, Plainridge Park Casino, and MGM Springfield. Online platforms like Caesars Sportsbook, DraftKings, FanDuel, BetMGM, and Fanatics also hold licenses. Kalshi, however, does not possess such authorization from the Massachusetts Gaming Commission (MGC).
AG Campbell’s Stance and Specific Allegations
Attorney General Campbell has stressed the importance of consumer protection. She also highlighted the necessity of adhering to the state’s carefully established legal framework for sports betting. She stated that the law is clear: only licensed entities can accept wagers on sporting events. Her office alleges that Kalshi’s operations undermine these vital protections. They also circumvent the regulatory process designed to ensure fair play and responsible gambling.
The lawsuit provides detailed examples of Kalshi’s “event contracts” that mimic traditional sports bets. For instance, users could bet on whether a specific NHL team would score more than 2.5 goals in a game. Another offering allowed users to predict if a particular NFL player would exceed a certain number of rushing yards. These types of contracts, according to the AG, are indistinguishable from prohibited forms of unlicensed sports wagering.
Kalshi’s Regulatory Status and Broader Context
Kalshi operates under a Designated Contract Market (DCM) license. This license is issued by the Commodity Futures Trading Commission (CFTC). The company generally positions itself as offering financial products, not gambling services. This regulatory framework often fuels debates over the classification of prediction markets. However, the Massachusetts AG’s lawsuit focuses squarely on the nature of the underlying event—sports—and specific provisions of state gambling law.
This is not the first time Kalshi has faced regulatory scrutiny regarding its offerings. The platform has previously drawn attention from regulators in other states. For example, in New York, concerns were raised regarding markets related to political outcomes. The outcome of this Kalshi sports betting lawsuit in Massachusetts could significantly impact how prediction markets are regulated at the state level, particularly when their contracts involve sports and entertainment.
Relief Sought by the Commonwealth
The Attorney General’s office is seeking several forms of relief from the court. These include a permanent injunction. This would prevent Kalshi from continuing its alleged illegal sports betting operations in Massachusetts. Additionally, the lawsuit demands restitution for any affected consumers. The Commonwealth is also pursuing civil penalties against Kalshi. These penalties are for its alleged violations of state law. This legal challenge underscores Massachusetts’ firm stance on maintaining a controlled and licensed sports betting market.
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