A Kentucky man has filed a proposed class action against prediction market company Kalshi, accusing the platform of offering illegal gambling products to residents across the state.
The lawsuit was filed Monday (May 11) in the U.S. District Court for the Western District of Kentucky. Plaintiff Donovan Roberts named Kalshi Inc., related business entities, and Susquehanna-connected firms as defendants. He claims the company has been operating what amounts to an online sportsbook without following Kentucky gaming laws.
According to the complaint, Kalshi users can spend real money on contracts tied to elections, sports, weather, and other future events. Roberts argues the setup mirrors traditional gambling despite the company presenting the contracts as financial products.
The filing says Kalshi’s “prediction market” is “nothing more than gambling, and it is untaxed, unregulated, and illegal in Kentucky.”
Roberts also claims the company allows users to “bet real money on everything from elections to tennis matches” outside the state’s regulated sports wagering system.
Kentucky Kalshi class action lawsuit targets prediction market model
The complaint points out several examples from Kalshi’s platform, including wagers tied to college football games, point spreads, total scores, and player touchdown props. Roberts argues those offerings resemble products available through licensed sportsbooks operating legally in Kentucky.
The lawsuit says Kalshi attempts to characterize the contracts as federally regulated financial instruments overseen by the Commodity Futures Trading Commission. But the filing argues the contracts “are nothing more than thinly veiled illegal wagers based on the outcome of specific future events.”
Roberts says Kentucky law only allows sports betting through licensed and regulated operators supervised by the Kentucky Horse Racing and Gaming Corporation. It also alleges Kalshi “has made no effort to comply” with those requirements while still targeting Kentucky users through online marketing, payment processing, and location-based advertising.
The case arrives as lawmakers in Kentucky discuss a gaming proposal that would raise the state’s legal sports betting age from 18 to 21 while also examining how sports prediction markets should be treated under Kentucky law.
Kalshi is also facing similar legal pressure outside Kentucky. A separate proposed class action filed in Oregon accuses the company of operating unlawful gambling products there as well.
The Kentucky lawsuit seeks to represent residents who allegedly lost more than $5 during any 24-hour period on Kalshi within the past five years. The filing relies on Kentucky’s gambling loss recovery law, which states that “the loser or any of his creditors may recover it, or its value, from the winner.”
The complaint also points to research connecting gambling addiction with financial hardship, mental illness, relationship problems, and suicide. Kalshi has not publicly responded in court filings to the Kentucky allegations.
Featured image: Kalshi / Canva
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