Kalshi is currently being sued in a class action suit in the US District Court for the Western District of Kentucky. The suit alleges that Kalshi has been providing illegal gambling services in the state.
The lawsuit was filed by Donovan Roberts for all resident’s who lost money trading on Kalshi’s platform over the past five years. The plaintiffs want to recover those losses based on the Kentucky gambling loss recovery law.
The complaint states that Kalshi’s event contracts based on sports, elections, weather and other real world outcomes are gambling products rather than legitimate financial instruments. The suit claims that the users are risking real money on uncertain events in the future, and as a result they have been participating in illegal gambling under Kentucky law.
According to the complaint, Kalshi operates without meeting the sports betting licensing and regulatory requirements in Kentucky.
The complaint also references the concerns by researchers and addiction experts that online betting platforms can lead to the financial, mental and gambling addiction issues.
Kalshi has not yet publicly responded to the lawsuit.
The lawsuit comes at a time when Kentucky lawmakers are moving toward adopting stricter gambling regulation with House Bill 904, which has restrictions on prediction market operations and includes increasing the minimum sports betting age to 21.
