Key facts
- Massachusetts authorities can proceed with an amended lawsuit against prediction market platform Kalshi.
- The amended complaint alleges Kalshi engaged in illegal sports betting and targeted underage users.
- Kalshi is accused of marketing to university campuses and allowing users as young as 18 to wager on sports.
- A judge previously granted an injunction barring Kalshi from offering sports event contracts.
- The CFTC asserts exclusive federal jurisdiction over prediction markets, viewing them as 'swaps'.
Massachusetts authorities have received judicial approval to file an amended lawsuit against the prediction market platform Kalshi, alleging the company has been operating illegally by offering sports betting and targeting users under the age of 21. Associate Justice Peter Krupp allowed the state to file a 71-page amended complaint, which builds on earlier allegations that Kalshi violated state laws by engaging in sports wagering.
The amended complaint specifically claims that Kalshi "targets those under 21 years of age and does little to stop them from using its platform," citing marketing efforts directed at university campuses and advertisements featuring individuals who appear to be underage. Massachusetts authorities contend that Kalshi permits anyone 18 or older to create an account and wager on sports events through its platform.
This legal battle is part of a larger trend of state-level authorities challenging prediction market companies like Kalshi and Polymarket. The Massachusetts Attorney General's office initially sued Kalshi in September 2025, asserting the company required a license from the Massachusetts Gaming Commission. A preliminary injunction was granted in January, prohibiting Kalshi from offering sports event contracts while the case proceeded.
However, Kalshi also has support from the U.S. Commodity Futures Trading Commission (CFTC), which argues it possesses exclusive jurisdiction over prediction markets. CFTC Chair Michael Selig stated that event contracts on these platforms constitute "swaps" under the Commodity Exchange Act and are thus not subject to state regulation. He emphasized that Congress has granted the CFTC sole authority to regulate commodity derivatives markets.
In response to these ongoing disputes, some industry groups are seeking legislative clarity. Gaming and tribal organizations have urged U.S. senators to include provisions in the Digital Asset Market Clarity (CLARITY) Act that would explicitly prohibit event contracts tied to sports and casino-style gaming.