Kalshi Faces Class Action Lawsuit Over Alleged Unlicensed Sports Betting

Prediction market operator Kalshi is embroiled in a new legal battle as seven users have filed a class action lawsuit claiming the platform functions similarly to an unlicensed sports betting operation. The complaint alleges that users are unknowingly wagering against the company through its affiliated entity, Kalshi Trading, which acts as a market maker. Kalshi co-founder Luana Lopes Lara refutes these claims, asserting that the platform is a peer-to-peer exchange with no house involvement, and that Kalshi Trading simply provides liquidity.

This lawsuit adds to Kalshi’s existing legal challenges, including actions from state gambling authorities and Native American tribal groups who also contend the exchange is facilitating illegal sports betting. Industry voices, such as Alex Immerman from Andreessen Horowitz, support Kalshi’s model, noting that prediction markets are not designed for participants to trade against a house.

Furthermore, Kalshi recently suffered a regulatory setback with a federal court ruling that it falls under Nevada’s gaming laws, restricting its ability to expand sports-related contracts. The court sided with the Nevada Gaming Control Board, overturning a previous order that allowed Kalshi to continue listing sports-linked contracts.

(Source：Cointribune)