Kalshi has time and again told gaming regulators that it cannot be sanctioned under state laws because it is a federally-licensed entity, and its products fall under the remit of the Commodity Futures Trading Commission (CFTC).
Kalshi Faces Pushback from Five Users Who Take the Company to Court
Yet, for a group of Kalshi users, this argument feels thin, so much so that they have launched a class-action lawsuit against the platform and specifically argue that it is, in fact, a gambling operator. Kalshi has been embroiled in similar legal battles, moving to try to have many of the complaints against it dismissed.
Five people have been named as plaintiffs, including Alexander Hallman, Jeremy Kravetz, Daniel Greenberg, Nathaniel Bee, and Abhijn Gutta, and they argue that the platform is using “deceptive” and “misleading” business practices.
The plaintiffs have attacked Kalshi over specific claims that they have documented as part of the complaint. One advert that was put forward by Dustin Gourke, an analyst, supposedly claimed that using the platform was a way to “get out of debt,” and cited the case of a woman who was struggling to pay rent, but got her life around after using Kalshi.
In the lawsuit, the plaintiffs state: “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. Several of the Kalshi slogans, for example, “everyone can win,” “everyone is an expert at something,” or “trade on what you know,” create the false impression that placing sports bets is not gambling, but making use of a skill-based financial tool.”
Self-Exclusion Proves a Delicate Topic for Prediction Markets
Kravetz, for example, argues that Kalshi poses a risk to people who struggle with problem gambling, as, although he is excluded from sportsbooks in his home state of Tennessee, he is still allowed to register and use Kalshi, for example.
However, this has to do with Kalshi’s status as a non-gambling entity, which the class-action lawsuit now seeks to address.
Kalshi is facing legal pressure all over the country, although it’s technically allowed to operate in all states across the nation, owing to its CFTC license. The company is fighting in Nevada, where the gaming regulator has been trying to turf it out, insisting that Kalshi indeed breaches local gaming laws.