Massachusetts is going after Kalshi, a popular prediction market platform, which has been named after the state’s latest lawsuit filed by Bay State Attorney General Andrea Joy Campbell.
The AG’s Office has shared an official press release in which it argued that the platform has self-described as an online "prediction market," but Campbell equated the activity as promoting and accepting online sports wagers from Massachusetts customers.
Massachusetts files lawsuit against Kalshi through AG’s office
The platform did so in violation of existing laws that govern sports gaming, including a missing licensure from the Massachusetts Gaming Commission (MGC), Campbell’s office alleged in its statement.
Kalshi has been embroiled in similar legal challenges across the United States, with the company making some headway in New Jersey, and so far, successfully arguing that its products do not constitute a form of gambling and are not therefore subject to such state or federal laws.
However, Campbell maintains the opposite to be true. "Sports wagering comes with significant risk of addiction and financial loss and must be strictly regulated to mitigate public health consequences," Campbell stated, adding that the lawsuit would ensure that should Kalshi seek to be a part of the "sports gaming business in Massachusetts," it must obtain the relevant license and follow the state laws.
This is the main point of contention. Kalshi has not acquiesced to any such allegations in the past, and the platform has repeatedly reiterated its unfaltering position – that it cannot be a sports gambling platform because it does not set the odds itself and is subject to a different set of regulations enforceable by the CFTC.
The MGC has also insisted that prediction market platforms are expanding aggressively into sports betting, but they fail to meet a slew of prerequisites that sportsbooks are obligated to maintain, such as age restrictions, player protection programs, state taxes, among others.
The legal definition of prediction markets can make or break their case
"My fellow commissioners and I appreciate the Attorney General’s efforts to enforce the law and hold these companies accountable to Massachusetts’ rigorous standards," said regulator Chair Jordan Maynard, who joined Campbell’s office in blasting the vertical.
The AG’s press release said that it acknowledged the "different" nature of prediction markets, but insisted that they "closely resemble sports wagering," and added that these platforms promoted their products through various channels to reach a wider audience.
Campbell’s office is also claiming that the legal gambling age in the Bay State is 21, whereas Kalshi, for example, allows users to participate in its event contracts from the age of 18. However, this is in line with Kalshi’s defense that the platform is not in fact a sportsbook.
