Judge grants Massachusetts injunction against Kalshi’s sports offers – igamingbusiness.com
A Massachusetts judge handed state regulators a key win to bar offering sports props and parlays without a betting licence.
Massachusetts secured a significant win against Kalshi this week, with a judge ruling the state can enforce its prohibition on the prediction market’s sports contracts.
Suffolk County Superior Court Judge Christopher Barry-Smith granted Massachusetts Attorney General Andrea Campbell’s request for a preliminary injunction against Kalshi. Campbell sued Kalshi in September aiming to stop the prediction market from offering sports wagering without a sports betting licence.
The injunction is scheduled to go into effect on Friday. There could be a hearing held the same day if either party requests one. Kalshi, which can appeal the ruling, did not respond to a request for comment at the time of publication.
In the order, Barry-Smith notes Kalshi “mirrors other digital gambling experiences” and “borrows gambling terminology”. He also notes the platform offers proposition bets and parlay contracts.
When Campbell filed the lawsuit, she said the prediction market operator must obtain a sports betting licence to offer sports event markets. The suit stated that Kalshi makes a larger percentage of its money from sports betting than do DraftKings or FanDuel.
“Sports wagering comes with significant risk of addiction and financial loss and must be strictly regulated to mitigate public health consequences,” Campbell said in the fall. “This lawsuit will ensure that if Kalshi wants to be in the sports gaming business in Massachusetts, they must obtain a licence and follow our laws.”
Prediction market lawsuits across the country
Multiple state regulators have sued Kalshi for offering unlicensed sports wagering.
Kalshi is in the middle of litigation in Nevada, New Jersey and Maryland. A Nevada judge initially granted Kalshi an injunction against the state but reversed his decision in November, allowing state regulators to treat sports event contracts as illegal gambling. That followed a similar ruling in Maryland.
“Kalshi relies on a strained reading of the already convoluted Commodities Exchange Act in an attempt to evade state regulation,” US District Judge Andrew Gordon’s Nevada reversal order reads. “Kalshi’s interpretation would require all sports betting across the country to come within the jurisdiction of the CFTC rather than the states and Indian tribes. That interpretation upsets decades of federalism regarding gaming regulation, is contrary to Congress’ intent behind the CEA and cannot be sustained.”
By contrast, a federal judge in New Jersey has granted Kalshi a preliminary injunction against the state regulator. That case is now in the US Court of Appeals for the Third Circuit. Campbell was among the 34 attorneys general who sent a brief in support of New Jersey’s case.
Other prediction market lawsuits
Regulators in New York and Ohio have also sued the prediction market platform, while others have sent Kalshi cease-and-desist orders. Crypto.com and Robinhood are also in the middle of legal fights.
Kalshi did secure a win in California in November. A judge denied a motion from tribal parties seeking to prevent the prediction market from operating on tribal land. The judge ruled that the CFTC regulation of prediction markets means they do not qualify as bets and therefore do not violate the Indian Gaming Regulatory Act.
The lawsuits come as major sportsbook brands like DraftKings and FanDuel roll out their own prediction market platforms across the country. Those products enter the market despite warnings from state regulators that they could put sports betting licences in jeopardy.
Pat Evans
Pat covers the legislation and regulation of online gambling in North and South America, having covered the US sports betting industry extensively since 2019.
