Kalshi Files Lawsuit Against First, Rhode Island Counters With Illegal Betting Charges
Kalshi has acted swiftly to defend its platform, filing a federal lawsuit against Rhode Island officials before the state had a chance to intervene. The company contended that regulators had already indicated their intention to pursue enforcement actions, making it clear that unless Kalshi ceased offering event contracts, action was imminent.
The complaint recalls a meeting on May 20, where officials refused to provide any assurances. “When Kalshi sought assurances that the Rhode Island Attorney General did not intend to bring an enforcement action against Kalshi, the Attorney General made clear that Kalshi would not receive any advanced notice before the state filed an enforcement action against the company,” the complaint stated.
Kalshi also highlighted earlier comments from Rhode Island Lottery Director Mark Furcolo, who described the state’s investigation into prediction markets as “very active.” According to Gambling Insider, the company warned that such enforcement efforts risk creating a “patchwork of state‑by‑state regulation Congress sought to prevent.”
In a swift response, Rhode Island Attorney General Peter Neronha filed suit against Kalshi and Polymarket just hours later, alleging that these platforms are operating illegal sports betting under the guise of prediction markets. Neronha’s complaint seeks an injunction to bar the platforms from offering bets on sporting events, arguing that their “event contracts” are essentially sports bets in disguise. “There is no substantive difference between sports betting and ‘events contracts’ in this context; Kalshi and Polymarket know that, and we know that,” he stated. He emphasized that Rhode Island law and its constitution impose strict gambling controls, which the companies are allegedly attempting to bypass.
State officials also voiced concerns about broader impacts, asserting that by circumventing the regulated system, the platforms are diverting business from Sportsbook RI and reducing the state’s revenue. More critically, they warned about the contribution of these sites to problem gambling. “By circumventing Rhode Island State law, we allege that Kalshi and Polymarket are harming Rhode Islanders’ mental and financial well-being,” the release explained.
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This legal clash comes just a week after Bally’s secured Rhode Island’s second online sportsbook license, breaking IGT’s Sportsbook Rhode Island’s monopoly established in 2019. Bally’s is expected to launch its platform in November, once IGT’s exclusive deal expires, signaling a significant expansion of the state’s gambling landscape. The Rhode Island Lottery opened applications late last year, but only Bally’s and Rush Street Interactive submitted bids. After review, Bally’s was selected; Deputy Director Michael O’Rourke noted that officials had hoped for more applicants but received only these two. Despite the high revenue split, with 51% of online betting revenue going directly to the state, Bally’s welcomed the opportunity, already operating two casinos in Lincoln and Tiverton.
Under the new arrangement, Bally’s will claim the full 49% share as both the online operator and the physical sportsbook provider. Lottery figures show that online betting generated $26.7 million from last July through March, with approximately $13.6 million of that amount allocated to the state.
