They Said It Was
Legal in All 50 States.
Courts Said Otherwise.
Kalshi told users sports betting was "now legal in all 50 states." It wasn't. Courts in Massachusetts, Nevada, Washington, Michigan, and Rhode Island have ruled or are actively ruling that prediction market sports contracts are illegal gambling under state law. On May 22, 2026, the Ninth Circuit let state enforcement proceed against both Kalshi and Polymarket. If you lost money on a prediction market platform in a restricted state — or were deceived about how the platform actually works — attorneys handling these claims are reviewing cases nationwide.
Litigation Status
First Class Action Filed.
Courts Moving Fast.
The prediction market legal situation is moving faster than almost any consumer litigation niche in recent memory. Five states filed or advanced lawsuits in 2025–2026. The Ninth Circuit denied stays for both Kalshi and Polymarket on May 22, 2026. The first consumer class action is already in federal court. The window to join is now.
The first-ever consumer class action against a prediction market was filed against Kalshi in the Southern District of New York — seven named plaintiffs representing thousands of users alleging unlicensed sports betting, false advertising, and market maker fraud. The suit seeks triple damages. A second class action followed in Kentucky in May 2026 invoking that state's gambling loss recovery statute.
The U.S. Court of Appeals for the Ninth Circuit denied stay requests from both Kalshi and Polymarket on May 22, 2026 — allowing Nevada and Washington state enforcement to proceed. The same day, Rhode Island's AG filed its own lawsuit against both platforms. Massachusetts issued a preliminary injunction against Kalshi in January 2026. The legal tide is running against the platforms.
Attorneys in this network handle prediction market lawsuit and gambling loss recovery claims on pure contingency. No retainer. No hourly billing. No upfront fees. If no compensation is recovered on your behalf, you owe nothing — period.
"By operating unlicensed sports betting, Kalshi violated gambling laws, engaged in illegal deceptive activity, and unjustly enriched itself at the expense of tens of thousands of consumers." — Class action complaint, SDNY, Nov. 2025
Legal Theories
What Prediction Market
Lawsuits Are Built On
Prediction market lawsuits aren't a single claim — they're a stack of theories standing independently. Gambling loss recovery, false advertising, market maker fraud, and addiction claims all run on different tracks. A connected attorney will assess which apply to your situation at no cost.
Gambling Loss Recovery — Getting Your Money Back From Illegal Sports Betting
Multiple states have determined that Kalshi's and Polymarket's sports event contracts constitute illegal gambling under state law. Several states have gambling loss recovery statutes allowing individuals to sue to recover money lost through illegal gambling. Kentucky's statute allows recovery within five years; other states have their own windows. If you placed prediction market sports trades in a state that has challenged the platform's legality — Massachusetts, Nevada, Washington, Michigan, California, Rhode Island, and others — a connected attorney can assess whether you can recover your losses.
"Legal in All 50 States" — False Advertising Claims Against Kalshi
A California class action specifically targets Kalshi's claim that sports betting was "now legal in all 50 states." California does not permit sports betting. The complaint alleges Kalshi used this representation to induce users in restricted states to deposit real money and place wagers. Users in states where sports betting is not legal who relied on this specific claim may have consumer protection claims independent of their underlying gambling losses.
Market Maker Fraud — Kalshi Trading & Susquehanna Secretly Betting Against Users
The November 2025 class action takes direct aim at Kalshi's core claim that it operates a peer-to-peer market. The complaint alleges that Kalshi Trading LLC — Kalshi's own subsidiary — and partner Susquehanna International Group acted as undisclosed counterparties on the other side of many user trades, making Kalshi the house while marketing itself as a neutral exchange. This misrepresentation forms the basis of deceptive trade practice claims seeking triple damages under New York business law and California's unfair competition statute.
Tribal Gaming Compact Violations — California & Wisconsin Tribal Lawsuits
Tribal nations in California and Wisconsin have sued Kalshi for undercutting their exclusive gaming compacts — compacts that granted tribes the exclusive right to operate sports betting in those states after decades of negotiation. The tribes argue Kalshi's unlicensed operation directly violates those exclusivity arrangements and diverts revenue that rightfully belongs to tribal governments and the communities they support. These cases add another litigation front that weakens Kalshi's federal preemption arguments.
Prediction Market Addiction — Compulsive Trading & Harm to Young Users
Kalshi processed more than $1 billion in NFL event contracts in the first month of the 2025 football season alone. The platform operates on the same smartphone-accessible, always-on model as DraftKings and FanDuel and has introduced compulsive trading risk to users who may not understand they are — in the courts' view — gambling. The same behavioral design and targeting concerns that drove sports betting addiction lawsuits against DraftKings and FanDuel are now being applied to prediction market platforms by attorneys evaluating these claims.
Polymarket Loss Recovery — Platform With Prior DOJ Settlement & State Enforcement
Polymarket blocked American users in 2022 following a DOJ settlement and a $1.4 million CFTC penalty. It re-entered the U.S. market through acquisition of licensed exchange QCX. Nevada sued Polymarket in January 2026, and the Ninth Circuit denied its stay request on May 22, 2026. Users who lost money on Polymarket — particularly those who traded while the platform was operating without proper U.S. authorization — may have viable recovery claims under applicable state gambling statutes.
Eligibility
Situations That May
Support a Claim
Prediction market claims cover users who lost money in restricted states, users deceived about how the platform operates, and users who experienced addiction-related harm. A connected attorney makes the final determination at no cost.
You lost money trading sports event contracts on Kalshi in a state that has challenged the platform's legality
If you placed sports trades on Kalshi while residing in Massachusetts, Nevada, Washington, Michigan, California, Rhode Island, or another state that has sued the platform or issued cease-and-desist orders, a gambling loss recovery claim may allow you to recover those losses. A connected attorney can confirm whether your state qualifies.
Kalshi told you sports betting was "legal in all 50 states" and you placed bets based on that claim in a restricted state
If you saw or relied on Kalshi's "legal in all 50 states" representation — in advertising, app onboarding, or marketing materials — and placed wagers in a state where sports betting is not permitted, that specific false advertising claim is the subject of an active class action. A connected attorney can assess whether your situation qualifies to join or file separately.
You believed you were trading peer-to-peer on Kalshi but may have been trading against its own market makers
If you used Kalshi under the understanding that you were trading against other users in a neutral marketplace, the class action's allegations about Kalshi Trading LLC and Susquehanna acting as undisclosed counterparties may affect you. A connected attorney can assess this claim track regardless of the state you traded in.
You developed compulsive trading behavior on Kalshi or Polymarket and experienced significant financial or personal harm
With $1 billion+ in NFL contract volume in Kalshi's first month of sports trading, and a product designed for continuous mobile engagement, the addiction risk profile mirrors sports betting apps already subject to widespread litigation. A connected attorney can assess whether your pattern of use and documented harm support addiction-based claims.
You lost money on Polymarket while it was operating without proper U.S. authorization
Polymarket was required to block American users in 2022 after DOJ action and a CFTC penalty. Users who traded on Polymarket during periods when the platform lacked proper authorization to serve U.S. users may have viable claims under applicable state gambling statutes. A connected attorney can assess the specific period of your trading.
Your prediction market losses occurred within the applicable statute of limitations window
Statutes of limitation vary by state and legal theory. For gambling loss recovery, windows range from two to five years. For false advertising and consumer protection claims, typically two to three years. With litigation actively building and courts ruling against the platforms, filing now is strongly advisable. A connected attorney can confirm your deadline at no cost.
How It Works
No Upfront Costs.
Your Losses, Pursued.
Attorneys in this network manage the complete prediction market lawsuit process — from free evaluation through filing. Whether joining the existing class action, pursuing a state gambling loss recovery claim, or filing an individual false advertising case, they handle everything.
Free Confidential Evaluation
A connected attorney reviews which platform you used, how much you lost, which state you traded in, and which legal theories apply. You'll quickly learn whether your situation supports a viable prediction market claim — no cost, no obligation.
Account & Trading Records
Trading history, deposit and withdrawal records, account statements, and any marketing communications you received from the platform are gathered to establish both your losses and the platform's specific representations to you.
Filing or Joining Existing Action
Your claim is filed — as a member of the existing Kalshi class action, as a separate consumer protection or gambling loss recovery claim, or coordinated with state regulatory proceedings — depending on the most advantageous path for your specific situation.
Settlement or Recovery
Attorneys in this network collect a contingency fee only from your recovery. There is nothing to pay at any point — no retainer, no hourly billing, no upfront fees of any kind.
From Those Who Filed
Their Words
"I'm in California. The app said sports betting was legal in all 50 states. I deposited $3,400 over football season. Then I read the lawsuit and found out California is specifically one of the states where it wasn't legal. I had no idea."
"I was trading what I thought was a pure peer-to-peer market. Then I saw the class action — Susquehanna was on the other side of my trades. Nobody disclosed that. That's not a neutral exchange. That's a sportsbook with better PR."
"I lost over $8,000 on Kalshi during the NFL season. When Massachusetts got the injunction I called an attorney. The gambling loss recovery statute in my state means I can potentially get it all back. The free evaluation was worth every minute."
Common Questions
What You Need to Know
Yes. The first consumer class action against a prediction market was filed against Kalshi in November 2025 in the Southern District of New York. Claims include unlicensed sports betting, the "legal in all 50 states" false advertising claim, and allegations that Kalshi's own affiliates secretly bet against users. A second class action was filed in Kentucky in May 2026 under that state's gambling loss recovery statute. Submit your information for a free evaluation to find out if you qualify.
Potentially yes. Massachusetts, Nevada, Washington, Michigan, and Rhode Island have all filed or advanced active enforcement proceedings declaring Kalshi's sports contracts constitute illegal gambling. Several states have gambling loss recovery statutes allowing individuals to sue to reclaim money lost through illegal gambling. A connected attorney can assess whether your state qualifies and what you can recover.
Lawsuits allege yes. A class action specifically targets this claim — sports betting is legal in only 39 states and Washington, D.C., and California specifically prohibits it. The complaint alleges Kalshi used this statement to induce users in restricted states to deposit real money and place wagers. A connected attorney can assess your false advertising claim at no cost.
Lawsuits allege yes. The November 2025 class action contends that Kalshi Trading LLC and partner Susquehanna International Group acted as undisclosed counterparties on the other side of many user trades — effectively making Kalshi the house while presenting itself as a neutral peer-to-peer exchange. The class action seeks triple damages for this alleged deceptive practice. Find out if you were affected.
Massachusetts issued a preliminary injunction against Kalshi in January 2026. Nevada and Washington are pursuing enforcement after the 9th Circuit denied stays on May 22, 2026. Michigan and Rhode Island filed suits in March and May 2026. These state-level rulings that prediction market sports contracts are illegal gambling directly support individual consumer gambling loss recovery claims in those states. A connected attorney can assess your state-specific claim.
Recovery depends on your documented trading losses, your state's applicable gambling loss recovery statute, and which legal theories apply. The November 2025 class action sought triple damages under consumer protection laws. State gambling loss recovery statutes allow recovery of amounts lost in illegal gambling. A connected attorney can assess your specific losses during a free, confidential review.
Yes. Statutes of limitation vary by state and claim type — gambling loss recovery windows range from two to five years; false advertising and consumer protection claims typically run two to three years. With litigation building rapidly and courts actively ruling against the platforms, filing now is strongly advisable. Contact a connected attorney today to confirm the deadline in your state.
The House Said It Was Legal.
Five States Disagree.
The evaluation is free. The consultation is confidential. There is no obligation until you choose to move forward.