IN THE UNITED STATES DISTRICT COURT
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`FOR THE SOUTHERN DISTRICT OF NEW YORK
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`ALEXANDER HALLMAN, JEREMY
`KRAVETZ, DANIEL GREENBERG,
`NATHANIEL BEE, AND ABHIJN GUTTA,
`individually and on behalf of others similarly
`situated,
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`Plaintiffs,
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`v.
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`KALSHIEX LLC, KALSHI, INC., KALSHI
`KLEAR INC., KALSHI KLEAR LLC, and
`KALSHI TRADING LLC,
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`Defendant.
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`Civil Action No.: 1:26-cv-00317
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`CLASS ACTION COMPLAINT
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`JURY TRIAL DEMANDED
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`Plaintiffs Alexander Hallman, Jeremy Krav etz, Daniel Greenberg, Nathaniel Bee,
`and Abhijn Gutta bring this action on behalf of themselves, and all others similarly situated, against
`defendants KalshiEx LLC, Kalshi Inc., Kalshi Klear LLC, Kalshi Klear Inc., and Kalshi Trading
`LLC (collectively, “Kalshi” or “D efendant”) to recover billions in wagers from Defendant’s
`unlawful operation of an illegal, unlicensed sports betting platform and related deceptive and
`misleading business practices. Pl aintiffs allege facts regardi ng themselves based on personal
`knowledge, and all other facts based on informati on and belief, following an investigation by
`counsel.
`NATURE OF THE ACTION
`1. Defendant Kalshi operates an illegal and unlicensed sportsbook under the guise of
`a “prediction market” by offering illegal sports “even ts contracts.” Plaintiffs seek to recover, on
`behalf of themselves and a Class of similarly situated individuals, their lost wagers, as well as costs
`and attorneys’ fees.
`2. For decades, states have used their sove reign police powers to strictly regulate
`sports wagering as a matter of public health, sa fety, and welfare. Following the Supreme Court’s
`decision in Murphy v. NCAA , 584 U.S. 453 (2018), which struck down a federal law related to
`sports gambling because it “was a limitation on state legislatures,” certain states passed new laws
`prohibiting sportsbooks from opera ting within their bo rders. According to these states, the
`existence of either legal or illegal sportsbooks would be detrimental to public health and welfare.
`3. Meanwhile, in the wake of the Court’s Murphy decision, other states moved to
`legalize and regulate sports betti ng. While revenue generation is a key driver of this movement,
`these states also recognize the po tential for expansive social harm s associated with legal sports
`betting. To address these concerns , these states universally impleme nted certain requirements to
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`ensure operators act transparently and protect co nsumers from known predatory and exploitative
`industry. By way of example, typical guardrails in states that have legalized sports betting include:
` Responsible Gaming Protections : Mandatory self-exclusion lists, deposit
`limits, and resources for those suffering from gambling addiction.
` Integrity and Fairness: Oversight to prevent match-fixing, insider betting, and
`unfair “house” advantages.
` Financial Security : Requirements that player f unds be held in segregated
`accounts and that operators possess the liquidity to pay out winnings.
` Advertising Restrictions: Strict rules to prevent predatory marketing targeted
`at minors or vulnerable individuals.
`4. Since 2021, Defendant Kalshi has operated a website and mobile app prediction
`market platform that offers users the opportunity to speculate on peer-to-peer “event contracts” in
`the form of “yes-or-no” questions. Originally, these contracts focused on a specific event like
`whether the U.S. would fall into a recession this year (or other such economic indicators), the
`occurrence (or non-occurrence) of events in music and film, as well as presidential approval ratings
`and the passing of significant laws in Congress and Supreme Court rulings.
`5. Beginning in January 2025, in its quest for profits from gambling addicts, Kalshi
`ignored all state sports gambling restrictions and extended its platform offerings to include single-
`game sports outcomes and proposition bets disgui sed as “event contracts.” At the same time, it
`marketed itself as the “First Nationwide Legal Sports Betting Platform” operating in all 50 states.
`Kalshi claims that these sports bets are not wagers but rather Designated Contract Markets
`(“DCMs”) purportedly regulated by the Commodity Futures Trading Commission (“CFTC”), and
`therefore lawful nationwide. This is false. In substance and operation, Kalshi is—a nd continues to
`be—an illegal, unlicensed (or “shadow”) sportsb ook masquerading as a “prediction market.” By
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`invoking federal commodities regulatio n as a pretext, Kalshi unlawfu lly offers sports wagers in
`states where sports betting is prohibited and avoids state licensure, taxation, and
`consumer‑protection requirements in states where sports betting is legal.
`6. Kalshi’s claim that its sportsbook is not sports betting but rather a prediction market
`is belied by: (1) its own public statements—prio r to 2025, Kalshi acknowledged that sports futures
`contracts were illegal under CF TC and state laws; (2) its cons umer-facing advertisements and
`marketing materials, which use distinct sports gambling phrases—like “moneyline” bets, “prop”
`bets, “over/under” bets, “odds” bets, and “parlays”— to refer to its platform offerings; and (3) its
`user-interface, which is functi onally indistinguishable from th e interface provided on regulated,
`established sportsbooks like DraftKings, FanDuel, and Caesars. Kalshi’s shadow sportsbook and
`its deceptive and misleading marketing statements and interfaces, therefore, intend to, and do in
`fact, mislead its users into believing the sports betting is legal, safe, and regulated.
`7. Kalshi further deceives sports betting users on its platform by claiming that Kalshi
`is a neutral, peer-to-peer exchange where trades only occur between independent participants. But
`this is not true. In its sportsbook, Kalshi plays the role of “the house” by utilizing its own affiliate
`(Kalshi Trading LLC) as well as other interested affiliates, as market makers. Specifically, Kalshi
`(or one of its affiliates) buys the other side of the sports bet, and if the bettor loses, then Kalshi,
`not some other user, collects the proceeds, just like a traditional sportsbook. By capturing the “bid-
`ask spread” and leveraging structur al advantages in data and exec ution, Kalshi is not a neutral
`middleman, as it deceptively represents to its users, but rather, it is a co nflicted participant that
`gains financially when its users’ lose their bets.
`8. Finally, Kalshi deceives sports betti ng users on its platform by ignoring well-
`established consumer protection provisions to encourage sports gambling on its platform. For
`example, Kalshi’s platform encourages higher-r isk groups (including, youth) , to trade, rewards
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`impulsive engagement, exploits anticipation, and diminishes user perception of financial risk,
`presenting the platform as if a user is not partic ipating in a highly addictive, and (in the case of
`Kalshi) illegal, behavior.
`9. Since Kalshi expanded into sports betting, the product has grown rapidly, outpacing
`all of its other offerings. For January to September of 2025, approximately 77 percent of Kalshi’s
`trading volume was sports betting, generating an estimated $4.8 billion in trades. In recent months
`these numbers have compounded. In the last four months of 2025, sports be ts accounted for an
`estimated 90% of trading volume, bringing in billions more in sports betting trades.
`10. Kalshi’s conduct, as described throughout this Complaint, violates state gambling
`and consumer protection laws. Kalshi’s unlawful deception, misrepresentations, and related illegal
`activity enable it to unjustly enrich itself to the detriment of Plaintiffs and the putative class.
`Accordingly, Plaintiffs, on behalf of themselves and the putative class, bring this lawsuit to recover
`billions in applicable damages, Kalshi’s unjust enrichment, and costs and attorneys’ fees, as well
`as any other relief provided by statute or that the Court may award.
`JURISDICTION AND VENUE
`11. This Court has jurisdiction over the subjec t-matter of this proposed class action
`pursuant to 28 U.S.C. § 1332(d), which, under the pr ovisions of the Cla ss Action Fairness Act
`(“CAFA”), provides for the original jurisdiction of the federal courts in any class action in which
`at least 100 members are in the pr oposed plaintiff class, any memb er of the plaintiff class is a
`citizen of a State different from any defendant, and the matter in controversy exceeds the sum of
`$5,000,000.00, exclusive of interest and costs. Plaintiffs allege that the total claims of individual
`members of the proposed Class (as defined herein) are in excess of $5,000,000.00 in the aggregate,
`exclusive of interest and costs.
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`12. Venue is proper in this Dist rict pursuant to 28 U.S.C. § 1391 because, at all times
`relevant to the Complaint, Defendants principal pl ace of business is in the District. Defendants
`also transacted business, were found, or had agents in this District, and a substantial portion of the
`affected interstate trade and commerce described in this Complaint was carried out in this District.
`13. This Court has personal jurisdiction over Defendant because, inter alia, Kalshi: (a)
`transacted business throughout the United States, including in this District; (b) offered sports bets
`to Plaintiffs and the classes throughout the Un ited States, including in this District; (c) had
`substantial contacts w ith the United States, including in th is District; or (d) engaged in conduct
`that was directed at and had a direct, foreseeable, and intended effect of causing injury to the
`business or property of persons residing in, lo cated in, or doing business throughout the United
`States, including in this District.
`14. The activities of Defendants, as described herein, were within the flow of, were
`intended to, and did have direct, substantial, and reasonably foreseeable effects on, the foreign and
`interstate commerce of the United States.
`PARTIES
`A. Plaintiffs.
`15. Plaintiff Alexander Hallman is a natural person and citizen of the State of Colorado.
`Plaintiff Hallman has had a Kalshi account since on or around August 2025. Plaintiff Hallman has
`placed sports bets on Kalshi valued at over $25 in the last three months in both Colorado and
`Minnesota. Relying on Defendant’s representations, including that sports betting on Kalshi was
`legal in all 50 states, Plaintiff Hallman wagered and lost thousands of dollars on sports bets.
`Plaintiff Hallman has a self-professed gambling pr oblem. After viewing ads for Kalshi on social
`media and television, Plaintiff Hallman took steps to block Kalshi from serving him with additional
`ads, including by blocking Kalshi on the social media platform Instagram and muting Kalshi
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`accounts on X. Plaintiff Hallman was concerned that viewing these ads would result in him giving
`in to an uncontrollable urge to place sports bets on Kalshi. Despite his best efforts to block future
`Kalshi ads, he continued to r eceive said ads, including on Instag ram and X. Plaintiff Hallman is
`continually injured by Kalshi’s unlawful sportsbook and its failure to comply with state
`regulations.
`16. Plaintiff Jeremy Kravetz is a natural pe rson and citizen of Tennessee. Plaintiff
`Kravetz has had a Kalshi account since on or around early 2025. Plaintiff Kravetz has placed sports
`bets executed by Kalshi valued at over $25 in the last three months in Tennessee. Plaintiff Kravetz
`viewed ads for Kalshi on social media and television, including a 2025 Superbowl ad claiming that
`sports bets on Kalshi are legal in all 50 states, including Tennessee. Plaintiff Kravetz has wagered
`or placed sports bets on Kalshi both directly and through its affiliation with the financial platform
`Robinhood. Relying on Defendant’s representations, Plaintiff wagered and lost thousands of
`dollars on Kalshi. Plaintiff Krav etz only tried Kalshi under the be lief that because it was not a
`sportsbook, it was a safer alternativ e to sports betting. Plaintiff Kravetz has a self-professed
`gambling problem and has self-excluded from all licensed legal sportsbooks in Tennessee. Plaintiff
`Kravetz is unable to similarly ex clude himself from participati ng in Kalshi sports betting on
`Robinhood, and when betting on Kalshi (directly or through Robinhood) is not offered many of
`the precautions that legal, licensed sportsbooks are required by law to provide. Plaintiff Kravetz is
`continually injured by Kalshi’s unlawful sportsbook and its failure to comply with state
`regulations.
`17. Plaintiff Daniel Greenberg is a natural person and citizen of Texas. Plaintiff
`Greenberg has had a Kalshi account since on or around November 2025. Plaintiff Greenberg has
`placed sports bets on Kalshi valued at over $25 in the last three months in Texas. Plaintiff
`Greenberg has placed sports bets on Kalshi both directly and through its affiliation with the
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`financial platform Robinhood. Plai ntiff Greenberg viewed ads for Kalshi on social media and
`television, including those claiming that sports bett ing is legal in Texas. Relying on Defendant’s
`representations, Plaintiff wagered and lost thousands of dollars on sports bets on Kalshi.
`18. Plaintiff Abhijn Gutta is a natural person and citizen of Georgia. Plaintiff Gutta has
`had a Kalshi account since December 2025. Plaintiff Gutta has placed sports bets on Kalshi valued
`at over $25 in the last three months in Georgia. Plaintiff has a self-professed gambling addiction.
`Plaintiff Gutta signed up for Kalshi believing that, because it was a peer-to-peer exchange, it would
`provide better chances at winning compared to a traditional sportsbook. Plaintiff Gutta viewed ads
`for Kalshi on social media and television, including those claiming that you can trade legally in all
`50 states. Relying on Defendant’s representations, Plaintiff wagered and lost thousands of dollars
`on Kalshi sports bets.
`19. Plaintiff Nathaniel Bee is a natural person and citizen of California. Plaintiff Bee
`has had a Kalshi account since on or about Oct ober 2024. Plaintiff Bee has placed sports bets on
`Kalshi valued at over $25 in the last three months in California. Plaintiff viewed ads for Kalshi on
`social media. Relying on Defendant’s representati ons that sports betting is legal in California,
`Plaintiff wagered and lost mone y on Kalshi sports bets. Had Pl aintiff known that Kalshi was
`operating an illegal sports betting operation he would have never used Kalshi to place sports bets.
`B. Defendants.
`20. Defendant KalshiEX LLC is a Delaware corporation hea dquartered at 594
`Broadway Rm 407, New York, New York 10012. Upon information and belief , it is a wholly
`owned subsidiary of Kalshi Inc. that operates as a commodities exchange. Together with other
`Kalshi entities, it operates a prediction market . Its overall trading volume for 2025 has been
`estimated at $22.8 billion.
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`21. Defendant Kalshi, Inc. is a Delaware corporation with its principal place of business
`and headquarters at 594 Broadway Rm 407, New York, New York 10012. Upon information and
`belief, it is the parent company of all other Kals hi entities. Defendant markets and offers sports
`betting through its “prediction market” in New York and the throughout the United States.
`22. Defendant Kalshi Klear Inc. is a Delaware corporat ion headquartered at 594
`Broadway Rm 407, New York, New York 10012. Upon information and belief , it is a wholly
`owned subsidiary of Kalshi Inc. that operates as a registered derivative s clearing organization.
`Together with other Kalshi entities, it operates a prediction market.
`23. Defendant Kalshi Klear LLC is a Delaware corpora tion headquartered at 594
`Broadway Rm 407, New York, New York 10012. Upon information and belief , it is a wholly
`owned subsidiary of Kalshi Inc. that operates as a registered derivative s clearing organization.
`Together with other Kalshi entities, it operates a prediction market.
`24. Defendant Kalshi Trading LLC is a Dela ware corporation h eadquartered at 594
`Broadway Rm 407, New York, New York 10012. Upon information and belief , it is a wholly
`owned subsidiary of Kalshi Inc. that operates as a market maker for Kalshi’s prediction market,
`buying and selling “event contracts” on the platform. Together with other Kalshi entities, it
`operates a prediction market.
`FACTUAL ALLEGATIONS
`I. History of Sports Betting.
`25. Regulation of gambling and sportsbooks ha s been a cornerstone of U.S. public
`policy, rooted in the exercise of States’ police power to protect the health, safety and welfare of its
`citizens. See e.g., Champion v. Ames, 188 U.S. 321, 356 (1903).
`26. Following a series of scandals, corruption, and erosion of sports market integrity in
`the 20th century (due to the rise of criminal syndicates as the primary operators of sports gambling
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`schemes throughout the United States), Congress pa ssed several statutes to strengthen States’
`police powers to regulate gamblin g within their own borders. See e.g. , 18 U.S.C. § 1084
`(prohibiting the use of wire communications to transmit sports wagers across state lines with the
`stated purpose of helping state authorities fight organized crime by disrupting their sports gambling
`businesses); 18 U.S.C. § 1952 (prohibiting using the mail or any facility in interstate commerce to
`engage in unlawful activities, and again, focuse d on assisting state authorities with combatting
`organized crime’s control of illegal gaming); 18 U.S.C. § 1953 (criminalizing the interstate or
`foreign transportation of gambling paraphernalia related to sporting events to further help state
`authorities combat illegal gaming).
`27. In 1978, Congress reaffirmed the widely held belief that “the States should have
`the primary responsibility for determining what forms of gambling may legally take place within
`their borders” when it passed the Interstate Horseracing Act, 15 U.S.C. §§ 3001.
`28. Notably, the one exception to this measured approach was the Professional
`Amateur Sports Protection Act (PASPA), which the federal government passed in 1992, and which
`banned almost all states from sanctioning sports gambling. Testifying in favor of the bill were the
`commissioners of the National F ootball League, Major League Baseball, National Basketball
`League, and National Hockey League, as well as athletes, doctors, and religious leaders.
`29. The legislative history confirms that PA SPA was passed, in part, to address the
`effects of sports gambling on the integrity of sports leagues, as well as to address the increasing
`risk of teenage gambling. Indeed, preventing societal ills, like addiction and financial ruin, was a
`major legislative concern (both then and now).
`30. In 2018, the Supreme Court overturned PASPA in Murphy v. National Collegiate
`Athletic Association, 584 U.S. 453 (2018), finding it violated the anti-commandeering doctrine of
`the 10th Amendment. In striking down the law, Justice Samuel Alito, writing for the majority,
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`famously stated: “It is as if fe deral officers were installed in st ate legislative chambers and were
`armed with the authority to stop legislat ors from voting on any offending proposals.” Id. at 474.
`Following this opinion, the power to regulate and determine sports gambling’s legality was, once
`again, returned to the states.
`31. Following this decision, 38 states and the District of Columbia moved to legalize
`sportsbooks while simultaneously requiring industry players to adhere to certain pro-consumer
`guardrails to ensure those who gambled for entertainment within their borders would be protected
`from the industries’ long-standing susceptibility to fraud, addiction, financial ruin and corruption.
`Numerous other states continue to outlaw sports gambling in all forms, based on the viewpoint
`that there is no regulation strong enough to combat the social ills of sports betting.
`II. Sports Betting in New York.
`32. Kalshi’s Membership Agreement and Ru lebook designate that any disagreement
`between users and Kalshi will be governed by New York law.1
`33. New York is one of the 38 states that ha s legalized sportsbooks, subject to careful
`regulation and licensing under the New York Racing Pari-Mutual Wagering and Breeding Law
`(“PML”). Following Murphy, New York amended § 1367 of the PML to allow licensed companies
`to offer mobile sports betting, making sports betting lawful to individuals located within New York
`who bet on platforms operated and maintained by licensed companies.
`34. New York also amended § 1367 to require betting platforms to implement various
`restrictions to protec t consumers. For example, among othe r things, sportsbooks in New York:
`cannot accept wagers from anyone under twenty -one; must follow responsible gaming rules
`promulgated by the commission, including “comprehensive employee trainings on responding to
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`1 https://kalshi.com/regulatory/rulebook; https://kalshi.com/docs/kalshi-member-agreement.pdf.
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`circumstances in which individuals present signs of a gambling addiction and . . . assess, prevent,
`and address problem gaming by . . . users”; must refuse wagers from individuals on any self-
`exclusion list; and must “assist[] the commissi on in conducting inves tigations into unusual
`wagering activity, match fixing, and other conduct that corrupts a wagering outcome of a sporting
`event or events.”2
`35. Unregulated sports betting of any kind— e.g., betting on unlicensed sportsbooks—
`is prohibited in New York.
`36. The New York Gaming Commission also taxes sports wagering operator revenue
`at 51 percent with all funds provi ding aid to education to New Yo rk’s public schools, except: $5
`million annually to fund sports programs for underserved youths (administered by the NYS Office
`of Children and Family Services); and $6 millio n annually to fund problem gambling education
`and treatment (administered by the NYS Office of Addiction Services and Supports).
`37. In 2021, New York awarded licenses to 9 mobile gaming operators. Kalshi is not
`one of them; Kalshi does not have a license to operate a sportsbook or a mobile sportsbook in New
`York.
`38. Kalshi does not pay sports wagering taxes to the state gaming commission on bets
`made within the State of New York.
`39. Kalshi also does not comply with (or othe rwise offer its users) the benefit of the
`comprehensive consumer protection provisions re quired of mobile spor tsbook operators in the
`State of New York.
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`2 PML § 1367; N.Y. Gen. Oblig. § 5-401.
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`III. Kalshi’s Unlawful Sportsbook.
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`40. Kalshi was established in 2018 by Tarek Mansour and Luana Lopes Lara, two
`financial analysts, who “observed that many financial decisions were driven by predictions about
`future events. However, they noticed a gap in the market: there was no straightforward way for
`people to trade directly on event outcomes.”
`3 Indeed, “[e]xisting financial products typically relied
`on complex structures to approximate event exposure, which were often cumbersome and costly.
`Recognizing this inefficiency, Ta rek and Luana were inspired to create a simpler, more direct
`exchange where people could trade on the outcome of specific events.”4
`41. Kalshi operates its futures exchange and mobile sportsbook out of its New York
`headquarters.
`42. Kalshi claims to operate all its products as a peer-to-peer prediction market,
`facilitating the trading of contracts between users. As explained on Kalshi’s website, the platform:
`Give[s] people the ability to trade based on their opi nions about a specific
`yes-or-no question. For example, if you have student debt and are worried
`about relief not passing, you can purchase a contract and get a payout even
`if it doesn’t pass. If you’re worrie d about the economic fallout of the
`government shutting down, you can place a trade to hedge against it. If
`you’ve developed a model on inflation, you can profit from that . . . and
`maybe even offset your rising costs.
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`43. Kalshi began offering event contracts in June 2021, in this binary yes-or-no format.
`Users receive a fixed payout if they correctly predict the occu rrence of the specific event in
`question and receive nothing if they are wrong.
`44. Each contract’s price (ranging from $0.01 to $0.99) would be determined based on
`total volume of “Yes” and “No” wagers, which cr eates real time fluctuations of the market’s
`perceived probability of the event occurring
`. As the perceived likelihood of an event occurring
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`3 https://kalshi.com/about.
`4 Id.
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`increases, the corresponding contract price increases. For example, if wagering on 100 “Yes” event
`contracts for a certain event to take place at a cost of 30 cents each ($30 total)—plus any applicable
`transaction fee—and the ev ent in fact occurs, it would result in payout of $1 per contract, or $100
`(netting $70). If incorrect, the original $30 is lost.
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`Figure A: Image created using Gemini prompt
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`45. In January 2025, Kashi announced it was ex panding its business model to offer
`“sports trading” on its platform. According to Kalshi, it could enable users to make sports bets on
`the outcome of various sporting events through a “legal sports market, accessible to Americans in
`all 50 states.”
`46. Only five months later, by June 2025, Kalshi had about 2 million users in the United
`States. While Kalshi has not reported the number of users more recently, on a recent, single NFL
`Sunday (December 7, 2025), it was estimated that $329 million was “traded” on Kalshi, with 97%
`(or $318 million) of the bets having been placed in its sportsbook.
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`WSJ
`A. Kalshi Deceives and Misleads Users by Operating an Unlicensed or Illegal
`Sportsbook in Violation of State Gaming Laws.
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`47. Pursuant to CEA § 5c(c)(5)(C) and CFTC Rule 40.11(a)(1), registered entities, like
`Kalshi, are prohibited from offering “gaming” contracts, or any activity that is unlawful under any
`State or Federal law.
`48. Indeed, in litigation before the Commod ity Future Trading Commission in 2024,
`related to Kalshi’s efforts to offer election-based prediction market products, Kalshi acknowledged
`that the “gaming” contracts prohibited under the CF TC rules includes “sports betting,” such as
`“contracts predicated on points spre ad and total points in NFL games.” 5 Kalshi also emphasized
`that sports betting contracts is “precisely what Congress had in mind” when it prohibited registered
`entities from offering “gaming” contracts.6
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`5 Memorandum of Law in Support of Plaintiff’s Motion for Summary Judgment, Kalshi LLC v. Commodity Futures
`Trading Commission, No. 23-cv03527-JMC, 2024 WL 397419 at *23 (D.D.C.).
`6 Id. at *23.
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`49. Likewise, on Thursday October 24, 2024, Chief Executive Officer and co-founder
`Tarek Mansour participated in a reddit discussion—under Kalshi ’s official reddit handle—
`regarding Kalshi’s recent, successful lawsuit to legalize electing futures trading.
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`50. In that conversation, Mr. Mansour ex plicitly acknowledged that Kalshi was
`successful in that litigation becau se it distinguished election futu res from “gaming,” or sports
`betting, which was “illegal on a federal level to bet on” as a futures contract.
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`51. In another comment in that reddit conversation, which appears to have since been
`deleted, Mr. Mansour emphasized that “There are certain prediction scenarios that we will never
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`list . . . we also avoid anything that could be interpreted as ‘gaming’ (like sports), as that is
`illegal under federal law.”
`52. As such, Kalshi’s leadership and top executives knew that it was illegal to offer
`futures contracts that are tied to sports outcomes. Yet, months later, Kalshi entered the sportsbook
`market and illegally began to offer sports bets in knowing violation of state laws.
`53. In doing so, Kalshi made false and misl eading statements to users who signed up
`for Kalshi’s sportsbook, deceiving them into believi ng that Kalshi has “legalized sports betting”
`and users could do so “in all 50 states.”
`54. Other ads similarly focus on the legality of sports bets on Kalshi, with phrases like
`“Sports Markets Made Legal,” “Bet on Football Legally with Kalshi,” “Breaking News: Sports
`Betting in All 50 States Now Legal” and “Sports Betting Officially Legal in” Minnesota/Texas/
`Florida, etc.
`Case 1:26-cv-00317-UA Document 1 Filed 01/13/26 Page 17 of 47
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`55. Kalshi specifically targets states where s ports betting is illegal in all forms, like
`Texas, Georgia, Minnesota and Florida, among others.
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`56. Beyond advertising that Kalshi is a legal sportsbook nationwide (while knowing it
`was not), Kalshi also used (and continues to use) misleading and deceptive language in its
`advertising and marketing materials.
`57. Kalshi set up a user interface that is nearly identical to a traditional sportsbook and
`uses the same gambling centric language. All of this was focused on convincing users of the safety
`and security of betting on a lawful marketplace, which (again) Kalshi is not.
`58. For instance, both Kalshi and licensed sportsbooks offer sporting events for
`consumers to wager on, present th e odds, and the cost of each wager. Both Kalshi and licensed
`sportsbooks offer very similar odds and payouts, as well as spread options.
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`A portion of a screen capture of the Kalshi App on the left taken on Dec. 22, 2025, showing the odds of
`Denver winning at 87% and calculating a payout of 6.73 which on a $10 bet would amount to a payout of
`$67. On the right is a screengrab of BETMGM, showing the same Denver vs. Chiefs game with odds of -
`550 which represents a $65 payout if correct.
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`59. Moreover, even the language that Kalshi uses in its ads and user interface, mimics
`the language known to gamblers: such as “spread,” “parlays,” “moneyline,” and “over/under.”
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`Kalshi Website screengrab featuring gambling terms “spread” “total” “props”
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`Kalshi Instagram advertisement for parlays
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`60. Like other lawful sportsbooks, Kalshi also offers sign-up bonuses and related
`enticements for new users, such as $10 free for new users or $10 for referrals.
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` Screengrabs featuring new user promos.
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`61. Kalshi’s website interface is further de signed to look like any of its lawful
`sportsbook competitors like Caesars or DraftKings, creating familiarity for new Kalshi users who
`have gambled on other sites. Kalshi also offers “sports mode” which converts the user interface to
`display spreads, money lines and totals, and looks exactly like legal sportsbooks.
`Case 1:26-cv-00317-UA Document 1 Filed 01/13/26 Page 21 of 47
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`Image from Kalshi Image from Caesars
`62. These advertisements, marketing materials, and user interfaces are deceptive and
`misleading to Kalshi