State officials in Massachusetts initiated legal proceedings on Friday in Suffolk County, alleging that the online platform Kalshi has been conducting sports betting without the proper permits. The complaint asserts that the company disguises its betting activities as events contracts, which should require a state license.
According to state filings, Kalshi has generated considerable revenue from these wagers. Between February 25 and May 17, 2025, approximately 70% of the platform’s trades involved sports bets. This percentage climbed to 75% after March 18, when it began offering single-game markets during March Madness. The document claims that earnings from these bets surpassed those of approved sports betting operators during the same period.
The state’s argument rests on the regulatory scope of events contracts, which are governed by a federal trading commission. Kalshi has maintained in federal court that the commission’s authority takes precedence over state oversight. Massachusetts officials counter that any entity engaging in sports wagering within the state must abide by local laws. Attorney General Andrea Joy Campbell stressed that companies must obtain a valid license to operate in Massachusetts.
Massachusetts has also requested a temporary order barring Kalshi from offering sports events contracts to its users while the dispute is resolved. In a related development, the financial services firm Robinhood filed a separate suit against the state, warning that it might soon find itself subject to similar actions. Robinhood, which facilitates sports betting through Kalshi’s platform, cautioned that the legal move could harm its public image and expose the firm to penalties.
Responding to the allegations, a Kalshi representative argued that the state is attempting to restrict its operations by applying outdated legal concepts. The spokesperson affirmed that the company is ready to defend its business in court and highlighted that nearly $439 million in wagers have been placed on NFL contracts, demonstrating a robust market presence.
Kalshi has also defended its model on a national level. The company recently presented oral arguments before an appeals panel in New Jersey, where state officials failed to secure a cease and desist order. This case, along with the ongoing dispute in Massachusetts, underscores the debate over how prediction-based trading platforms should be regulated.
The rulings could shape future market rules.