Prediction market platform Kalshi is gearing up to combat a new lawsuit filed by the US state of Massachusetts, which alleges that the company offers unlicensed sports betting to residents. The lawsuit, submitted to the Suffolk County Supreme Court, claims that Kalshi disguises sports betting as “event contracts” and violates the state’s strict gambling laws.
A spokesperson for Kalshi told CoinTelegraph that the company is “proud to be the pioneer of this technology and is ready to defend it again in court.” Kalshi believes that predictive markets are a critical innovation of the 21st century and that all Americans should have access to them. The company argues that it is regulated by the Commodity Futures Trading Commission (CFTC) at the federal level and does not fall under state gambling jurisdiction.
Kalshi’s Legal Challenges
The lawsuit filed by Massachusetts is not the only legal challenge that Kalshi is facing. The company has previously argued that it is regulated by the CFTC and does not need to obtain licenses from individual states. However, some states, including Arizona, Montana, Ohio, and Illinois, have raised concerns about Kalshi’s operations. According to the lawsuit, over three-quarters of Kalshi’s trading volume comes from sports, which is a larger proportion than industry giants DraftKings or FanDuel.
Kalshi’s spokesperson stated that the company believes that Massachusetts is trying to block its innovations by relying on outdated laws and ideas. The company is confident that it will be able to defend its position in court and continue to offer its services to residents of Massachusetts.
Regulation and Innovation
The case highlights the ongoing debate about the regulation of predictive markets and sports betting in the United States. While some states have legalized sports betting, others continue to prohibit it. Kalshi’s argument that it is regulated by the CFTC and does not need to obtain state licenses has been met with skepticism by some regulators. However, the company believes that its innovative approach to predictive markets is critical to the development of the industry.
Meanwhile, another blockchain-based prediction market, Polymarket, has announced that it is working with Chainlink to improve the accuracy of its market solutions. The company has also reported that it is investigating a return to the US market and is seeking to evaluate new funding, which could value the company at up to $10 billion.
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