Kalshi class action lawsuit claims its running a rigged sportsbook
Kalshi, the major prediction market, has been hit with a nationwide class action lawsuit, filed in the Southern District of New York. The suit claims that Kalshi is allowing illegal sports betting, as well as forcing players against the house.
In the lawsuit, it’s effectively claimed that Kalshi is running rigged bets, including placing its own staff in the gambling mix:
“A Kalshi representative called Kalshi Trading “one of many ‘peers’ in the peer-to-peer ecosystem. Kalshi Trading is not a peer; it is the House.”
Kalshi accused of running rigged gambling
“Consumers on Kalshi do not only bet against each other—they also bet against the House. Kalshi operates institutional market makers, which also gamble against the consumer.” pic.twitter.com/23SZgb7LI9
— Daniel Wallach (@WALLACHLEGAL) November 27, 2025
This accusation continues further down into the lawsuit, where it implicates “market makers” in the rigged betting. The way that they operate is by providing liquidity through buying and selling.
In the lawsuit, market makers are accused of running “a model” that is far too close to “House betting”:
“Market makers operate using a model indistinguishable from House betting in other illegal sportsbooks that the law prohibits.
“While consumers may bet on either side of the House baseline in any sportsbook, the House sets the betting line and profits when consumers pick wrong.”
As Kalshi isn’t regulated on a state-by-state basis through gambling watchdogs, as with other sportsbooks, it’s allowed to skirt the law and introduce gambling that wouldn’t be allowed otherwise. Instead, it’s federally regulated by the CFTC (Commodity Futures Trading Commission).
A wrinkle in the class action is that Kalshi has connections. Donald Trump Jr. is on its advisory board, while a previous choice for CFTC chair, Brian Quintenz, is on the board of directors for the company.
Kalshi has already hit back at the lawsuit, doing so over X (formerly Twitter). Responding to sports betting lawyer Daniel Wallach, the Kalshi News account said:
“This lawsuit demonstrates many fundamental misunderstandings about how federally-regulated DCMs operate. Anyone who understands how Kalshi works will see it for what it is – meritless fiction.”
This lawsuit demonstrates many fundamental misunderstandings about how federally-regulated DCMs operate. Anyone who understands how Kalshi works will see it for what it is – meritless fiction.
— Kalshi News (@KalshiNewsroom) November 27, 2025
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