Kalshi, a prominent prediction market platform, is facing a preliminary injunction that could prohibit it from offering sports and related event contracts in Massachusetts. This legal action, initiated by Massachusetts Attorney General Andrea Joy Campbell, aims to ensure the company adheres to state gambling regulations, specifically those enforced by the Massachusetts Gaming Commission (MGC). The injunction was secured on January 20, 2024, and prevents Kalshi from accepting contracts related to sports events from customers in Massachusetts until it obtains the necessary licensing.
Campbell emphasized the importance of regulatory compliance, stating, “The Court has made clear that any company that wants to be in the sport gaming business in Massachusetts must play by our rules — no exceptions.” This ruling represents a significant effort to strengthen Massachusetts’ gambling laws, addressing potential public health issues linked to unregulated gaming.
The lawsuit, filed by Campbell in September 2023, alleges that Kalshi’s event contracts qualify as sports wagering. According to the Attorney General’s office, Kalshi has not applied for nor received a sports wagering license from the MGC. This injunction marks a critical moment in a broader struggle between federal and state regulations governing prediction markets, which are designed to allow users to bet on future events.
A hearing is scheduled for January 23, 2024, to clarify how the injunction will be enforced and whether it will be stayed pending an appeal by Kalshi. The presiding judge indicated that the injunction would aim to minimize its impact on Kalshi’s business operations while ensuring compliance with state laws.
Kalshi is currently involved in legal disputes in several states, but this is the first instance where its operations have been subjected to an injunction. The company’s legal team argues that its sports event contracts should fall under the jurisdiction of the U.S. Commodity Futures Trading Commission (CFTC), which they claim oversees these contracts rather than state gaming laws.
This ongoing conflict highlights the tension between state and federal regulators regarding the classification and legality of prediction markets. In December 2023, Kalshi successfully raised $1 billion in a Series E funding round, with plans to expand its platform. The company aims to accelerate consumer adoption, integrate additional brokerages, forge new partnerships, and enhance its product offerings.
As the situation develops, the outcome of the upcoming hearing will be crucial for Kalshi and the future of its operations in Massachusetts. The decision will not only affect the company but also set a precedent for how similar platforms navigate the complex landscape of gaming regulations across the United States.
