Kalshi Faces Legal Challenges Over Sports Betting Allegations

Kalshi, a rising star in prediction markets, is embroiled in a lawsuit alleging it operated an unlicensed sportsbook. Seven customers claim the platform misled users by presenting itself as a regulated financial exchange while facilitating sports betting. The lawsuit seeks to recover bets and potentially triple damages, arguing Kalshi's structure mirrored a sportsbook rather than a derivatives exchange.

Plaintiffs allege Kalshi or its connected trading desks acted as market makers, effectively wagering against users. Sports betting reportedly dominated the platform, accounting for 90% of trading during peak months. This volume, plaintiffs argue, underscores Kalshi's focus on sports betting despite lacking proper licenses.

Kalshi disputes the claims as scrutiny over sports betting intensifies. The case highlights the blurred lines between prediction markets and traditional sports wagering, raising questions about regulatory oversight in emerging financial platforms.