Kalshi Facing Class Action Suit Over Shady Sports Betting Practices
Posted on: November 28, 2025, 12:40h.
Last updated on: November 28, 2025, 12:40h.
- Plaintiffs in national class action believe Kalshi’s claims about superior odds compared to traditional sportsbooks are dubious
- Suit says Kalshi clients are actually betting against the house, dispelling notion of a purported peer-to-peer model
- Litigation claims Kalshi ran afoul of laws in California, Florida, and New York, among other states
A proposed class action lawsuit filed against Kalshi Wednesday in the US District Court for the Southern District of New York claims the prediction markets operator employs deceptive practices on sports event contracts and that the company is violating gaming and other laws in dozens of states.
Counsel for seven named plaintiffs claim that although Kalshi positions itself as a prediction market, it “operates an unlicensed sports gambling platform” — one that misleads consumers into thinking they’re betting against each other and getting better pricing than what they find with traditional sportsbooks. The litigation claims customers’ reality is far different than what Kalshi pitches.
Defendants Kalshi Trading LLC and KalshiEX, both wholly owned subsidiaries of Kalshi, operates as highly sophisticated ‘market makers,’ which bet against consumers when their bets stray from Kalshi’s internal projected odds,” according to the complaint.
Attorneys for the aggrieved parties also point out that Kalshi partners with hedge funds like Susquehanna International Group to take opposing sides of customers’ bets.
“Market makers operate using a model indistinguishable from House betting in other illegal sports betting that the law expressly prohibits,” according to the legal document. “While consumers may bet on either side of the House in any sportsbook, the House sets the betting line, and profits when consumers pick wrong. Kalshi’s market makers set the baseline. Upon information and belief, Kalshi coordinates directly with its market makers to set betting lines.”
Kalshi Is no Friend of Retail Traders
It’s widely known that Kalshi, which is facing mounting state-level legal opposition and losing some of those cases, charges fees to smaller retail bettors and traders while limiting or eliminating those costs for sharp bettors and market makers in exchange for the liquidity those market participants provide.
That’s one example of smaller bettors facing an uphill climb on Kalshi and data confirm that most market participants on the platform lose money. Some experts argue that the key to being consistently profitable on platforms like Kalshi is to identify markets that are mispriced. Sports event contracts, particularly those pertaining to popular sports such as football and basketball, are unlikely to be mispriced with any regularity because those are highly liquid markets.
Counsel for the proposed class action assert Kalshi clients are being duped into thinking they’re betting against peers when in reality they’re wagering against Kalshi itself, which is supported by market makers with superior technological capabilities.
“Consumers do not realize they are actually being tricked into betting against Kaslshi,” note the lawyers.
“When consumers place bets on Kalshi, they face against money provided by a sophisticated market maker on the other side of the ledger.”
Kalshi Violating State Laws, Claim Class Lawyers
The proposed class action also asserts Kalshi violated myriad state laws, including California’s unfair competition law, various gaming laws in Florida, and New York’s general business law. Those are potentially meaningful claims because New York is the largest sports wagering market in the US and because, in Florida, that form of wagering is controlled by the Seminole Tribe and it’s permitted at all in California.
“By operating unlicensed sports betting, Kalshi has violated gambling laws, engaged in illegal deceptive activity, and unjustly enriched itself at the expense of tens of thousands of consumers,” the complaint says. “Accordingly, Plaintiffs on behalf of themselves and a Class of similarly situated individuals, bring this lawsuit to recover their wagers, as well as costs and attorneys’ fees.”
The suit was filed just days after reports surfaced indicating Kalshi’s valuation surged to $11 billion and a day after Robinhood Markets, which has been a major source of Kalshi volume, said it’s building its own prediction market platform.
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