Massachusetts gambler sues Kalshi for enabling his addiction and losses
A gambler from Raynham, Massachusetts, has taken legal action against prediction market platform Kalshi. Nicholas Smith claims the company enabled his gambling disorder, leading to significant financial losses in early 2025. The lawsuit, filed in April, seeks repayment for his losses and those of other affected users. Smith had previously struggled with gambling addiction and enrolled in self-exclusion programmes. Despite this, he was not blocked from using Kalshi when the platform introduced sports event contracts in January 2025. Within a month, he lost tens of thousands of dollars on the site.
The lawsuit, submitted on April 22 in Suffolk County Superior Court, argues that Kalshi’s operations violate the Statute of Anne. The Commodity Futures Trading Commission (CFTC), which oversees Kalshi, maintains that its products are not gambling. However, Smith’s legal team disputes this classification, pointing to the financial harm caused. The case follows broader concerns about prediction markets. Brazil recently banned such platforms, citing risks where gambling overlaps with financial trading.
The lawsuit demands compensation for Smith’s losses and any future claimants. If successful, it could set a precedent for how prediction markets are regulated in the US. Kalshi has yet to respond publicly to the allegations.
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