Massachusetts AG Alleges Kalshi Operates As An Illegal Sports Book; Robinhood Seeks Federal Relief

By Bill Speros Sep 15th, 2025 1:46 PM EDT

Online sports betting began in Massachusetts in 2023. (USA TODAY)

Massachusetts Friday joined the list of states that have taken Kalshi to court.

A lawsuit seeks to block the site from operating its sports trading platform in the Commonwealth.

The 43-page suit filed by Attorney General Andrea Campbell claims Kalshi operates in the same manner as a sports betting site. Kalshi is neither licensed, regulated, nor taxed by the state. Sports betting is regulated and managed by the Massachusetts Gaming Commission.

The broader challenge to determine the difference - if any - between a “trading market” and “sportsbook” remains contested in several jurisdictions. Trading markets such as Kalshi are regulated by the Commodities Futures Trading Corporation (CFTC). They are not subject to the same state-by-state regulations facing sportsbooks, nor are they taxed on the state level.

Kalshi received cease-and-desist orders from Arizona, Illinois, Montana, and Ohio. It has ongoing litigation against New Jersey in the U.S. Court of Appeals for the Third Circuit. And it remains entangled in litigation with regulators in Maryland and Nevada. 

"Kalshi offers its users a fair, transparent, federally-regulated, and nationwide marketplace. Rather than engage in dialogue with Kalshi as many other states have done, Massachusetts is trying to block Kalshi’s innovations by relying on outdated laws and ideas," a Kalshi spokesperson told bookies.com.

"Prediction markets are a critical innovation of the 21st century, and all Americans should be able to access them. We are proud to be the company that has pioneered this technology and stand ready to defend it once again in a court of law."

Robinhood Seeks Federal Injunction Against AG

Monday, Robinhood filed its own lawsuit in federal court seeking prevent both the Massachusetts Attorney General and Massachusetts Gaming Commission from enforcing preempted Massachusetts law against Robinhood for its facilitation of transactions involving sports-related event contracts."

Robinhood serves as the financial arm for trades made on Kalshi, the suit says, but adds the special sporting event contracts targeted in the Massachusetts lawsuit trade on Kalshi.

"n light of Massachusetts’s complaint against Kalshi and because Robinhood intermediates its sports-related event contract trades on Kalshi’s exchange, there is a real and imminent threat that Massachusetts will file a similar complaint and motion against Robinhood," the suit says.

AG: Kalshi Must Obtain A License And Follow Our Laws

“Sports wagering comes with significant risk of addiction and financial loss and must be strictly regulated to mitigate public health consequences,” Campbell said in a statement Friday. “This lawsuit will ensure that if Kalshi wants to be in the sports gaming business in Massachusetts, they must obtain a license and follow our laws."

Kalshi offers "sports wagering" through an “exchange" and via "event contracts," the Massachusetts lawsuit alleges. The filing in in Suffolk County Superior Court uses the term “sports wagering” throughout. And cites examples of Kalshi touting itself as a "sports betting" site on social media.

The sports trading contracts on Kalshi usually offer a “yes” or “no” market on the outcome of an event. Kalshi's offerings have expanded to prop wagers and parlay offerings.

Sports-betting-related terms have appeared in Kalshi's advertising and social-media posts since it launched in the U.S.

Kalshi 'Engaged In Sports Betting,' Suit Says

Kalshi neither applied for nor received a Massachusetts sports wagering licenses, as required by law, the suit alleges.

The suit claims Kalshi engages “in the business of accepting wagers” and does so without a license issued by the (MGC).”

The AG seeks monetary relief in an amount to be determined. She wants to prohibit Kalshi from “engaging in sports wagering without a license.”

The suit claims sports-based trading markets operate as regulated sportsbooks.

“Despite Kalshi calling its products ‘event contracts,’ consumers are placing wagers on the outcome of sporting events,” the suit alleges.

MGC Meeting Early Sign Lawsuit Was In Works

Last week, the Massachusetts Gaming Commission met with members of the AG’s office in an executive session. A meeting such as that often precedes legal action taken in the gaming space.

“Prediction market companies are expanding into sports wagering while neglecting age restrictions, player protection programs, state taxes, and other consumer protections. (We) appreciate the Attorney General’s efforts to enforce the law and hold these companies accountable to Massachusetts’ rigorous standards,” said Massachusetts Gaming Commission Chair Jordan Maynard in a statement. “We look forward to our continued partnership with Attorney General Campbell and her office.” 

The AG futher requests that the court order Kalshi to cease offering "sports wagering" in Massachusetts while the lawsuit is pending.