kalshi

Judge Christopher Barry-Smith of the Suffolk County Superior Court in Boston has ordered a ban on sports prediction markets operated by Kalshi in the state of Massachusetts. The ruling follows a request by Massachusetts Attorney General Andrea Campbell, who argues that Kalshi’s offering effectively circumvents and violates the state’s sports betting laws.

Preliminary injunction and possible appeal
Barry-Smith said that following a January hearing, he plans to finalize an injunction requiring Kalshi to comply with Massachusetts sports betting law. At the same time, he indicated he is considering a temporary stay of the order to allow the prediction market platform to file an appeal. According to the court, licensing and regulatory oversight of sports betting are essential not only for public safety and consumer protection, but also for the state’s financial interests.
Attorney General Campbell welcomed the decision, calling it a significant step toward strengthening the enforcement of gambling laws and reducing the public safety risks associated with unregulated betting.

“Public interest” and a level playing field
The judge emphasized that the preliminary injunction serves the public interest, as it helps ensure equal oversight and fair competition among all betting-related operations in the state. He noted that the order is forward-looking, minimizing disruption while requiring Kalshi to begin complying with Massachusetts law.
Barry-Smith also rejected Kalshi’s defense as unconvincing, stating that the platform knowingly continued offering sports contracts in Massachusetts even after being warned to exercise caution. This occurred despite the state’s active enforcement efforts requiring sports betting operators to be licensed. Any difficulties Kalshi now faces in removing non-compliant offerings, the judge said, are the result of risks the company knowingly chose to take.

Prior precedent and the role of federal regulation
In support of his decision, the judge cited a similar case from last November in Nevada, where Kalshi lost after a federal judge ruled that its prediction markets are subject to state gambling laws. Barry-Smith added that Kalshi takes an overly broad view of federal law, stressing that Congress never intended to strip states of their traditional authority to regulate gambling.
The court concluded that state gambling regulations can coexist with the authority of the federal regulator, the Commodity Futures Trading Commission (CFTC), without conflict.

Kalshi’s defense and the state’s counterarguments
Kalshi maintains that state gambling laws do not apply to its sports-related contracts, arguing that its operations fall under the exclusive jurisdiction of the CFTC as exchange-traded derivatives. Massachusetts, however, contends that these contracts—often structured as binary options—function in practice like traditional sports bets.
Campbell compared Kalshi’s model to licensed sportsbook operators such as FanDuel, arguing that the platform accepts wagers on amateur and professional sporting events under the guise of “event contracts.” As a result, the state asserts that Kalshi’s offerings meet the legal definition of sports betting under Massachusetts law.

Criticism of platform design and behavioral tactics
Court filings also scrutinized Kalshi’s platform design, which prosecutors say incorporates behavioral design elements drawn from gambling psychology to encourage impulsive betting. Examples include highlighting potential payouts in bright green, while displaying odds in neutral colors—subtly emphasizing rewards while downplaying financial risk.

Kalshi’s response
A Kalshi spokesperson rejected the criticism, stating that the platform provides users with a fair, transparent, federally regulated, nationwide marketplace. The company argued that Massachusetts is attempting to stifle innovation in prediction markets by relying on outdated concepts and laws.
The ruling once again raises a broader question: where the line should be drawn between innovative financial products and regulated sports betting—and how authority should be divided between state governments and federal regulators.

#Kalshi , #BAN , #fintech , #Regulation , #worldnews

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