Kalshi in old familiar bind as Massachusetts AG presses on

• Massachusetts’ AG is seeking a court order to block Kalshi’s sports event contracts in the state
• Kalshi has maintained its defense, arguing that the grounds of such an order are a misinterpretation of existing federal laws
• Campbell is determined to see the shuttering of Kalshi’s operations locally when it comes to sports, at least

Kalshi has been one of the true success stories of the prediction market space. After overcoming long odds during the 2024 US presidential election and finally being allowed to roll out markets based on political outcomes, the platform moved swiftly ahead with the introduction of sports event contracts, which have ruffled gambling regulators’ feathers across the country.

Kalshi braces for new legal pressure in yet another US jurisdiction

Now, the company is facing yet more pressure in Connecticut, where a federal judge has allowed it to continue offering its sports event contracts for the time being, and in Massachusetts, where Attorney General Andrea Joy Campbell has been on the offensive against the platform.

Campbell has asked a state court judge to move ahead and issue a prohibition on Kalshi’s offer of sports event contracts in the Bay State, with the argument already well-established: the platform is de facto running a gambling product but is not subject to any gambling regulation.

This claim has been denied time and again by Kalshi, which is subject to financial regulation under the Commodity Futures Trading Commission’s mandate. The platform argues that its products are event contracts and that it does not set any odds itself, exempting it from gambling laws as such.

The Massachusetts development is important for Kalshi, as this is the first time a state is turning to a court in order to block the platform from running its sports event contracts.

Prediction markets are going mainstream one way or another

The development also comes at a time when mainstream sports betting companies, such as Fanatics, FanDuel, and DraftKings, are planning to or already have launched their own prediction market platforms, showing confidence in the segment’s future.

Campbell hopes that the court will side with her and introduce an injunction that completely blocks Kalshi’s operations in the state. In Nevada, a judge similarly ordered Kalshi to stop operations only recently.

Campbell has gone further to suggest that by allowing sports event contracts, Kalshi and other platforms are effectively breaking the state’s legal gambling age – 21 or older, as prediction markets are available to people as young as 18.

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