New York, Jan 19: Kalshi is facing a proposed class-action lawsuit from five users who allege the federally licensed prediction market should be treated as a gambling operator under state law, challenging the company’s long-held position that its products fall outside traditional gaming regulation.
The lawsuit argues that Kalshi’s portrayal of itself as a financial marketplace, rather than a gambling platform, is misleading and deceptive. Kalshi has repeatedly told regulators that it is exempt from state gambling laws because it is overseen at the federal level by the Commodity Futures Trading Commission.
Five plaintiffs – Alexander Hallman, Jeremy Kravetz, Daniel Greenberg, Nathaniel Bee and Abhijn Gutta – contend that Kalshi’s marketing blurs the line between sports betting and financial trading, creating a false impression that users are engaging in a skill-based investment activity rather than gambling.
“Kalshi markets itself as a financial tool, one that is safe and can help pay rent, less prone to losses due to its peer-to-peer structure, and skill-based,” the plaintiffs said in their complaint.
The lawsuit highlights promotional materials attributed to analyst Dustin Gourke that allegedly suggested the platform could help users “get out of debt,” including an anecdote about a woman who was able to cover rent after using Kalshi. The plaintiffs argue such messaging understates the risks involved and overstates the role of skill.
The complaint also takes aim at Kalshi’s slogans, including “everyone can win,” “everyone is an expert at something,” and “trade on what you know,” which the plaintiffs say create “the false impression that placing sports bets is not gambling, but making use of a skill-based financial tool.”
Self-exclusion protections are a central issue in the case. Kravetz alleges that although he is barred from using sportsbooks in his home state of Tennessee due to problem gambling concerns, he can still register and trade on Kalshi.
The plaintiffs argue this exposes vulnerable users to gambling-related harm without the safeguards typically required of licensed betting operators.
Kalshi’s ability to operate nationwide stems from its CFTC licence, but the company is facing mounting legal pressure at the state level. In Nevada, the Nevada Gaming Control Board has sought to block Kalshi’s operations, asserting that the platform violates local gaming laws.
The lawsuit seeks to challenge Kalshi’s status as a non-gambling entity under federal law, potentially setting up a broader legal test of how prediction markets are regulated in the United States.
