Kalshi Faces Legal Action Over Alleged Sports Betting Operation
Kalshi, a CFTC-regulated prediction market, is embroiled in a class-action lawsuit filed in the Southern District of New York. The plaintiffs accuse the platform of operating an unlicensed sports betting scheme, with nearly 90% of its September 2025 trading volume tied to sports-related contracts.
The lawsuit alleges Kalshi misled users by positioning institutional market makers as the "House," mirroring traditional sportsbook dynamics. Retail traders were reportedly betting against these market makers rather than competing among themselves, a structure the plaintiffs claim violates gambling regulations.
Seven plaintiffs from multiple states have joined the action, which comes as several state regulators have already initiated proceedings against Kalshi's operations. The case highlights ongoing tensions between innovative financial products and established gambling laws.
