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Rhode Island AG files lawsuit against Kalshi and Polymarket
The Attorney General of Rhode Island, Peter Neronha, filed a lawsuit on May 21 against Kalshi and Polymarket, accusing the platforms of offering illegal sports betting under state law.
The lawsuit was filed just hours after Kalshi filed its own federal preemptive complaint against Rhode Island to block it from applying state law to its event contracts.
Kalshi’s lawsuit stated:
“Event contracts are a valuable means to hedge against event-driven volatility. Advertisers, sponsors, television networks, local communities, sportsbooks, and others all stand to gain or lose substantial sums depending on the outcomes of sports events. 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.”
In response, AG Neronha stressed that prediction markets use gambling-style mechanics and that contracts tied to sports are equal to sports betting products, which are regulated under Rhode Island gambling law.
Attorney General Neronha commented:
“There is no substantive difference between sports betting and ‘events contracts’ in this context; Kalshi and Polymarket know that, and we know that. 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.”
The AG’s lawsuit is seeking a permanent injunction to ban sports event contracts in the state, as well as declaratory relief, restitution, and disgorgement.
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