State gambling enforcement against Kalshi is being challenged as 38 attorneys general back Massachusetts’ lawsuit. The case could shape whether states can enforce gambling licensing rules against event contracts.
Key Takeaways:
- Coalition of 38 attorneys general supports Massachusetts lawsuit alleging Kalshi enables unlicensed sports betting activity.
- CFTC filing adds to the dispute as federal regulator claims exclusive authority over prediction markets.
- Court decision in Massachusetts case could reshape balance between state gambling enforcement and federal oversight powers.
Kalshi Sports Betting Lawsuit Draws State Enforcement Push
A bipartisan coalition of 38 attorneys general has filed an amicus brief supporting Massachusetts’ lawsuit against Kalshi, arguing the platform is violating state gambling laws by offering sports betting without a license. The filing was submitted to the Supreme Judicial Court of Massachusetts and calls for enforcement of state authority over gambling regulation.
New York Attorney General Letitia James said on April 24:
“ Prediction markets cannot ignore states’ gambling laws that are designed to protect consumers.”
The attorneys general argue Kalshi’s platform offers “event contracts” that allow users to bet on outcomes, including sports events, without complying with state licensing requirements. Massachusetts sued Kalshi in September 2025, alleging unlawful sports betting activity. In response, Kalshi argued its offerings are financial instruments known as swaps, which fall under the Commodity Futures Trading Commission (CFTC)’s authority. The attorneys general reject that claim, stating the Dodd-Frank Wall Street Reform and Consumer Protection Act was intended to regulate financial instruments tied to the 2008 recession, not permit sports gambling nationwide. They argue the statute does not mention gambling and does not displace state authority.
States Challenge Kalshi Over Gambling Oversight Stakes
Signatories include attorneys general from Alabama, Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Hawaii, Idaho, Illinois, Iowa, Kansas, Louisiana, Maine, Maryland, Michigan, Minnesota, Mississippi, Nebraska, Nevada, New York, New Jersey, New Mexico, North Carolina, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Utah, Vermont, Virginia, Wisconsin, and the District of Columbia. The attorneys general state that gambling regulation has long been controlled by states and that any shift in authority would require clear direction from Congress. At the time Dodd-Frank was enacted, states were barred from legalizing sports betting under federal law, which remained in place until 2018.
Officials also argue that states are best positioned to address gambling-related harms, including consumer protection and preventing youth exposure. Attorney General Letitia James said:
“Kalshi’s event contracts for sports are just illegal gambling by another name, and they should play by the same rules as every other licensed gambling platform.”
The brief highlights that in 2025 users bet more than $1 billion each month on the platform, with 90% tied to sports betting. The attorneys general are urging the court to affirm a lower court ruling that prevents Kalshi from allowing Massachusetts residents to bet on sports while the case proceeds unless the company obtains the required license.
Separately, the CFTC said on April 24 it filed an amicus brief asserting exclusive jurisdiction over prediction markets, arguing federal law preempts state regulation. Chairman Michael S. Selig said: “Congress has entrusted the CFTC with the sole authority to regulate commodity derivatives markets, including prediction markets.”