Massachusetts Man Sues Kalshi in Class Action Over Missing Self-Exclusion Protections

A Massachusetts man who has struggled with gambling addiction is suing Kalshi in a class action lawsuit filed April 22 in Suffolk County Superior Court, alleging that the prediction market platform accepted his wagers despite the absence of any self-exclusion mechanism. The case adds a private legal front to an already significant state enforcement battle and raises pointed questions about whether prediction markets must adopt the same responsible gambling infrastructure required of licensed sportsbooks.

The Plaintiff and What He Alleges

Nickolas Smith, a man in his 40s from Raynham, Massachusetts, says he has a well-documented history of gambling addiction and has voluntarily enrolled in self-exclusion programs to prevent himself from wagering. Those programs blocked him from licensed sports betting apps and from entering casinos. Kalshi, however, offered no such option. According to the complaint, between January 25 and February 23, 2026, Smith lost tens of thousands of dollars placing sports wagers on Kalshi’s mobile app and website. The lawsuit names both Kalshi and Robinhood promo code, which hosts Kalshi’s prediction markets on its platform.

Smith’s attorneys are seeking repayment of all amounts he and similarly situated individuals lost on sports wagers placed through the platform. The complaint also seeks disgorgement of Kalshi’s transaction fees, deposit and withdrawal fees, and profits, as well as injunctive relief requiring Kalshi to cease offering sports wagers in Massachusetts without a license from the Massachusetts Gaming Commission.

The lawsuit invokes the “Statute of Anne,” a legal framework originating in British law in 1710. The statute was designed to protect gamblers from financial ruin by allowing them to sue to recover money lost in unlawful gambling. Massachusetts courts have applied the statute in cases involving unlicensed gambling operations, and the plaintiff’s legal team is arguing Kalshi’s platform qualifies as unlawful gambling under state law, making lost wagers recoverable. The complaint argues that “Kalshi’s framing of its offerings as derivatives is illusory” and that users are simply placing sports bets.

Kalshi’s Position and the Regulatory Fight

Kalshi operates as a federally regulated prediction market and has consistently argued that it is not a sportsbook subject to state sports betting licensing requirements. The Commodity Futures Trading Commission designates Kalshi as a designated contract market, and the company has argued that federal regulation preempts state oversight. That argument has not fared well in Massachusetts courts so far. In September 2025, Attorney General Andrea Campbell sued Kalshi, alleging it was running unlicensed sports wagering operations in the state. On January 20, 2026, a Suffolk Superior Court judge granted a preliminary injunction ordering Kalshi to stop accepting sports wagers from Massachusetts customers until it obtained proper licensure. Kalshi appealed, and the Massachusetts Appeals Court granted a stay in February pending resolution of the appeal. The state’s Supreme Judicial Court heard oral arguments in the case in late April.

The AG’s office has argued that Kalshi’s “event contracts” on sporting events, including moneyline contracts, point spread contracts, and over-under contracts, are functionally indistinguishable from the sports wagers offered by licensed operators. The office also noted that Kalshi allows users as young as 18 to place wagers even though the legal minimum age in Massachusetts is 21, and that the platform provides limited tools to help users manage financial risk. The class action echoes those arguments and adds the self-exclusion gap as a central grievance.

The Self-Exclusion Gap and What It Means

Self-exclusion programs are a cornerstone of responsible gambling frameworks in every state that has legalized sports betting. Licensed operators in Massachusetts are required to check the state’s voluntary exclusion list and decline wagers from anyone enrolled in it. The Massachusetts Gaming Commission maintains the list and integrates it into the licensing requirements for sports betting operators. Kalshi, by arguing that it is a federally regulated prediction market rather than a sportsbook, has not participated in the state’s self-exclusion system. That gap is precisely what Smith’s complaint targets.

For problem gamblers who rely on self-exclusion as a harm reduction tool, a platform that falls outside the system creates an obvious vulnerability. Someone who has blocked themselves from DraftKings, FanDuel, and local casinos can still access Kalshi’s markets on their phone with no restriction. The complaint argues that Kalshi was aware or should have been aware that individuals with gambling disorders would use its platform, particularly after it expanded into sports wagering in January 2025 ahead of the Super Bowl and other major events.

What Certification as a Class Action Could Mean

The lawsuit has not yet been certified as a class action, and that step will be one of the first major legal hurdles. For certification, Smith’s attorneys must show that a sufficiently large number of similarly situated individuals exist, that common questions of law and fact predominate, and that the class action mechanism is superior to individual claims. The complaint does not specify how many class members may qualify, but Kalshi operated in Massachusetts from the time it launched sports markets in January 2025 until the January 2026 injunction took effect, a window of roughly one year. If the class is certified, the financial exposure for Kalshi could be substantial, encompassing all net losses by Massachusetts customers during the relevant period plus the company’s fee revenue from those transactions.

Beyond the financial stakes, the case could have regulatory consequences that extend well past Massachusetts. Prediction markets have grown rapidly since the CFTC gave Kalshi the green light for sports event contracts in 2024. Platforms including Kalshi, Robinhood, and DraftKings Predictions now operate in this space. If courts consistently treat prediction market sports contracts as functionally equivalent to sports bets, the entire sector may face pressure to adopt sportsbook-level responsible gambling requirements, including self-exclusion participation, age verification aligned with state minimums, deposit limits, and wager caps. For bettors who use prediction market apps, understanding the current absence of those protections is important context while these legal questions are resolved.