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Lawsuit filed
Prediction market platform Kalshi is facing further legal problems after the state of Massachusetts filed a lawsuit against it, alleging that the company is offering unlicensed sports betting in the state.
lacks other safeguards necessary for sportsbooks, such as offering self-restrictions
The suit was filed on Friday, September 12, claiming that Kalshi’s event contracts are fundamentally indistinguishable from sports betting, for which Kalshi has no license. The platform also lacks other safeguards necessary for sportsbooks, such as offering self-restrictions.
The state attorney general further claimed Kalshi made more money on sports betting than legal sportsbooks, or from its standard prediction markets.
Legal battles
Kalshi has encountered several legal challenges since its launch in 2021, both around sports betting and election wagers.
Kalshi previously took legal action against state regulators in New Jersey and Nevada, winning initial victories in its bid to be classified differently from sportsbooks. However, with additional states looking to make challenges on the same grounds, the legal battles ahead could be grueling.
Massachusetts State Attorney Andrew Joy Campbell said: “Sports wagering comes with significant risk of addiction and financial loss and must be strictly regulated to mitigate public health consequences.”
“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. I am grateful for the ongoing partnership with the Gaming Commission.”
Lax regulations
The lawsuits against Kalshi have all tended to follow the same pattern – alleging that the prediction markets offered are effectively indistinguishable from regular sportsbooks.
In addition to not holding a license, Kalshi also lacks other safeguarding features that are prerequisites for obtaining one, such as self-exclusion programs and strict age restrictions.
prediction market companies are expanding into sports wagering while neglecting age restrictions”
Massachusetts Gaming Commission chair Jordan Maynard welcomed the lawsuit, stating: “Prediction market companies are expanding into sports wagering while neglecting age restrictions, player protection programs, state taxes, and other consumer protections.
“My fellow commissioners and I appreciate the Attorney General’s efforts to enforce the law and hold these companies accountable to Massachusetts’ rigorous standards. We look forward to our continued partnership with Attorney General Campbell and her office.”
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