Kalshi fires back at Rhode Island lawsuit while targeting “Kalshi Lies” campaign

Prediction market operator Kalshi has escalated its legal fight with state regulators after filing suit against Rhode Island officials and sending a cease-and-desist letter to a group behind an anti-Kalshi advertising campaign.

The company filed a federal complaint against Rhode Island authorities after state officials signaled potential enforcement action tied to Kalshi’s sports event contracts. Hours later, Rhode Island Attorney General Peter Neronha responded with a separate lawsuit accusing both Kalshi and Polymarket of operating unlicensed sports betting products through prediction markets.

The dispute adds another chapter to Kalshi’s growing legal battle across multiple US states, where regulators continue challenging the company’s argument that its sports markets fall under federal commodities law rather than state gambling oversight.

Rhode Island becomes the latest battleground

According to Kalshi’s filing, Rhode Island officials allegedly refused to assure the company that enforcement action was not imminent during a meeting earlier this week. Kalshi argued that the threat alone justified federal intervention, claiming its event contracts are regulated by the Commodity Futures Trading Commission rather than state gaming agencies.

The state’s lawsuit argues that Kalshi and Polymarket are effectively offering sports betting products without obtaining local licenses or complying with gambling regulations. The complaint specifically targets sports-related event contracts, which allow users to trade on game outcomes and player performances in a format regulators increasingly compare to traditional sportsbooks.

That argument has surfaced repeatedly over the last several months. Regulators in Nevada, Massachusetts, Connecticut, Washington, Wisconsin and other states have either filed lawsuits, issued cease-and-desist orders or secured temporary restrictions against Kalshi’s operations. Courts have delivered mixed rulings so far, leaving the broader legal question unresolved.

Sports contracts have also become central to Kalshi’s business. Reporting from earlier this month estimated that roughly 90% of activity on the platform now comes from sports-related markets, including esports events.

“Kalshi Lies” campaign draws legal response

Alongside the Rhode Island filing, Kalshi also issued a cease-and-desist letter to FairPredicts, the group behind a recent advertising push using the slogan “Kalshi Lies.”

The campaign accuses Kalshi of misleading users about how its markets function, alleging the platform operates more like a sportsbook while relying heavily on internal market-making activity through Kalshi Trading and institutional participants. FairPredicts has not publicly disclosed its funding sources.

Kalshi has denied the accusations and is now attempting to halt the campaign through legal pressure, arguing the advertisements contain false and misleading claims about the company’s operations.

The timing is notable given Kalshi’s recent efforts to position itself closer to responsible gambling and consumer protection discussions despite continuing to reject the “gambling” label attached to its products.

Just days before the Rhode Island dispute, Kalshi announced a $2 million partnership with the National Council on Problem Gambling, becoming the first member of the organization’s newly created “Financial Services & Trading” category.

The move drew immediate scrutiny across the gambling industry because Kalshi has consistently argued its platform is a federally regulated financial exchange rather than a sportsbook. Critics questioned why a company rejecting gambling classifications would simultaneously partner with one of the largest responsible gambling organizations in the US.

Kalshi maintains the initiative is focused on “trader health and safety,” not gambling addiction, though the distinction is becoming harder to separate as more states challenge the company’s sports markets in court.