Kalshi accused of deceiving its users — lawsuit launched
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7 Dec 2025 •
Reading time: 3 minutes For several months now, the Kalshi platform — initially conceived as a derivative prediction market — has been at the centre of a legal and regulatory storm in the United States. Between class action lawsuits, state injunctions and accusations of false advertising, the drama is shaking up the world of sports betting and event trading.
Class action lawsuit filed
At the end of November 2025, a class action lawsuit was filed in a federal court in New York. Seven plaintiffs claim to have been misled by Kalshi. According to them, the platform led them to believe that they were placing bets between users, when in reality they were betting against the house. In other words, according to the complaint, the contracts sold by Kalshi were equivalent to traditional bets, not financial instruments. Worse still, the plaintiffs claim that almost all of the bets — 90% in September 2025 — were on sporting events.
The complaint seeks to recover the sums lost by users, be judged by a jury, and possibly obtain damages multiplied up to three times the initial amount of the bets.
Kalshi fights back
Responding to the complaint, Kalshi co-founder Luana Lopes Lara did not mince words. She called the case a pure smear campaign, accusing an unnamed competitor of paying social media accounts to amplify baseless accusations. In a message posted on X (formerly Twitter), she claims that the criticism is damaging to the entire prediction markets industry.
Lara reaffirms Kalshi’s official position: it is not a bookmaker, but a peer-to-peer market, i.e. an exchange where users can ‘trade’ contracts with other users or institutional entities. Market makers (such as the subsidiary Kalshi Trading LLC or partners such as the Susquehanna International Group fund) would not receive any preferential treatment, she said.
How far will the state vs. federal debate go?
Since the beginning of 2025, several US states have sent cease-and-desist letters or filed lawsuits against Kalshi and similar platforms. These states believe that the platform’s contracts constitute illegal betting, subject to gaming regulations and not federal jurisdiction. Kalshi, for its part, asserts that its activities are regulated at the federal level under the authority of the Commodity Futures Trading Commission (CFTC) and that state laws therefore do not apply.
However, the company’s legal position was weakened on 24 November 2025, when a federal judge in Nevada, Andrew Gordon, lifted a preliminary injunction protecting Kalshi: he ruled that certain contracts, particularly those related to sporting events, were sufficiently similar to betting to fall under state gambling laws.
According to specialist lawyers, if this reasoning prevails in other states, it could mean that a large number of prediction market operations become illegal at the local level.
Despite these legal storms, Kalshi has not given up. On another front, an attempt by California Indian tribes to block the operation was rejected on 10 November 2025. A federal court ruled that their arguments — based in particular on the fact that Kalshi was violating Class III gaming agreements on tribal lands — did not warrant an injunction.
But there are many opponents: a coalition of attorneys general from 34 states, tribes representing some 60 nations, casino operator associations, and anti-gambling groups have all expressed concern. They see Kalshi’s model as a circumvention of state control over gambling that could disrupt the entire regulation of the sector.
However, economically speaking, Kalshi continues to attract capital. The debate is fuelled by both institutional conflict and strategic issues: predicting the future of online betting or consolidating the traditional defences of states and casinos.
A turning point for prediction markets
This situation is not just another legal dispute — it could redraw the contours of the entire betting and prediction market industry in the United States. Between lawsuits, injunctions, regulatory pressure and media battles, the outcome remains uncertain. But one thing is certain: the courts’ decisions over the coming months could define the future of this new economic model.