Kalshi, Rhode Island Trade Lawsuits in Prediction Market Fight

^{The state of Rhode Island is in the process of determining whether or not to prevent prediction markets from offering sports-based contracts. (Photo: Valerio Rosati / Alamy)}

Prediction market platform Kalshi and Rhode Island Attorney General Peter Neronha each filed lawsuits in federal and state courts on Thursday, as the two sides battle over whether Rhode Island can prevent prediction markets from offering sports contracts in the state.

The legal actions continue a trend of lawsuits pitting state and tribal officials against the prediction markets, which have support from the Commodity Futures Trading Commission (CFTC) and the Trump administration.

Neronha Quickly Responds to Kalshi Complaint

Kalshi fired the first blow on Thursday, suing Neronha and other Rhode Island officials in U.S. District Court in Providence. The company is seeking an emergency temporary restraining order and preliminary injunction to prevent state officials from barring the platform from Rhode Island, saying it expected the state to “act imminently against Kalshi’s federally regulated business.”

In its lawsuit, Kalshi framed its offerings as fundamentally different than sports betting, and said its contracts were valuable to a variety of users.

“Event contracts are a valuable means to hedge against event-driven volatility,” Kalshi wrote in its complaint. “Advertisers, sponsors, television networks, local communities, sportsbooks, and others all stand to gain or lose substantial sums depending on the outcomes of sports events. Sports event contracts thus offer these entities opportunities to hedge their exposure.”

Neronha responded just hours later. The Rhode Island Attorney General filed a lawsuit in Rhode Island Superior Court, seeking a permanent injunction to block sites including Kalshi and Polymarket from offering sports-based contracts in the state.

“There is no substantive difference between sports betting and ‘events contracts’ in this context; Kalshi and Polymarket know that, and we know that,” Neronha said in a press release. “The problem here is that Rhode Island State law heavily regulates gambling, for good reason, and we allege that Kalshi and Polymarket are evading our laws.”

Is a Supreme Court Battle Inevitable?

Currently, Rhode Island allows sports betting only via a lottery-controlled site that is operated by IGT. Bally's has also been approved to offer an online sportsbook in the state beginning in November 2026.

While the legal issues are playing out in several states, both prediction markets and state regulators have scored wins and losses in various venues. Legal questions include whether Congress intended for the CFTC to have jurisdiction over such a wide range of contracts when it authorized the agency to regulate swaps and derivatives, as well as whether the CFTC’s regulatory oversight of prediction markets preempts some or all state and tribal regulations regarding sports betting.

Because courts haven’t come to a consensus on these arguments, it’s likely that the issues will eventually find their way to the Supreme Court of the United States. For now, Kalshi and other prediction market platforms are still active in most states, though Nevada officials have successfully obtained a preliminary injunction preventing Kalshi from offering sports, entertainment, or electoral contracts in the state.