Kalshi Hit with Lawsuit over Alleged Sports Gambling Operations

Here we go again, with Kalshi having to spell out time and over that it is not in fact offering sports betting markets, but a vastly superior productImage Source: Shutterstock.com

From gambling regulators to attorney generals and now private citizens, Kalshi has had to fend off one lawsuit after another. Although it appears to be winning at least in Nevada, the prediction market platform has not had a quiet moment.

The latest legal development filed against it comes in the form of a New York Southern District class-action lawsuit and plaintiff Daniel Yee.

Private Individual Files Class-Action Complaint Against Kalshi

The San Francisco residentclaims that the New York-based company had wronged him by convincing him that it operates a “legal sports betting product,” but that wasn’t the case, and Kalshi’s offer was indeed “illegal.”

Kalshi insists that it has never claimed that it offers sports gambling products, but rather event contracts that can feature the outcomes of sports, which are different and regulated by the CFTC. Gambling regulators and Yee have objected.

“Based on Kalshi’s false representations, Plaintiff Daniel Yee and the Classes bargained for entry into legal sports gambling contests. But all they received from Kalshi was entry into illegal sports gambling contests,”the lawsuit reads, and insists that Kalshi failed to disclose the “fact” that it was offering illegal gambling contests.

Should it have done so, Yee would never have registered. The lawsuit also insists that Kalshi conveyed the message that gambling was “legal in all 50 states,” which was also not true. The lawsuit also cites specific California law according to which sports event contracts are a “banking game” and the “house” is, in fact, a participant.

Pressure on Kalshi’s Sport Event Contracts Continues

It is not immediately clear whether the case has merit, but it is true that other states, including New York, have already been debating the legitimacy of Kalshi as a platform.

Yee is looking for $2,000 in restitution of funds he lost with Kalshi, but similarly, nominal, punitive, consequential, and other damages, equitable relief, and all legal costs and expenses associated with the case.

Ideally, Yee is hoping to bring the court to a jury trial. Kalshi is not shy of spearheading legal challenges itself, with the platform most recently suing Ohio.