Kalshi, a prediction market platform, is confronting a significant legal hurdle in Massachusetts that may prevent it from offering sports event contracts. On January 20, 2024, Massachusetts Attorney General Andrea Joy Campbell announced that a preliminary injunction has been granted against the company. This injunction will bar Kalshi from accepting contracts related to sports events from customers in the state until it secures licensing from the Massachusetts Gaming Commission (MGC) and complies with relevant state laws governing sports gaming.
In her statement, Campbell emphasized the importance of regulation, stating, “The Court has made clear that any company that wants to be in the sports gaming business in Massachusetts must play by our rules — no exceptions.” She described the ruling as a critical step toward strengthening Massachusetts’ gambling laws and addressing public health concerns associated with unregulated gaming.
Kalshi, which has yet to comment on the injunction, is currently engaged in legal disputes with several states over its operations. Notably, this marks the first instance where an injunction has been issued against the company’s activities within a specific state.
According to the Attorney General’s office, the lawsuit filed in September 2023 alleges that Kalshi’s event contracts are equivalent to sports wagering. The company has not applied for or received a sports wagering license from the MGC. A hearing scheduled for January 23, 2024, will determine the specifics of how the injunction will be enforced and whether it will be temporarily halted if Kalshi decides to appeal the ruling.
The presiding judge indicated that the injunction aims to limit the impact on Kalshi’s business while ensuring compliance with state regulations. Kalshi’s legal team argues that its sports event contracts do not fall under state gaming laws, asserting they are regulated solely by the U.S. Commodity Futures Trading Commission (CFTC).
The ongoing legal challenges highlight a broader conflict between federal and state regulators regarding prediction markets. While these markets typically operate under CFTC jurisdiction, numerous states have recently intensified efforts to close down platforms they consider unlicensed or illegal gambling entities.
In a separate development, Kalshi secured $1 billion in a Series E funding round in December 2023. The company expressed intentions to expand its prediction market platform through increased consumer engagement, integration with more brokerages, new partnerships, and a broader array of product offerings.
As the situation unfolds, the implications for Kalshi and the broader prediction market landscape in the U.S. remain uncertain. The outcome of the upcoming hearing could set a precedent for how similar platforms operate under state regulations.
