The Commonwealth of Massachusetts has initiated legal action against the prediction platform Kalshi, claiming that the company is facilitating unregulated sports betting disguised as event contracts.

This lawsuit, lodged in Suffolk County Superior Court on Friday, seeks a court order to prevent Kalshi from providing sports event contracts in Massachusetts while the litigation unfolds.

“If Kalshi intends to engage in the sports gaming sector in Massachusetts, they are required to obtain a license and comply with our regulations,” stated Attorney General Andrea Joy Campbell.

Massachusetts asserts that Kalshi is generating more revenue from sports betting than authorized entities such as DraftKings and FanDuel. The lawsuit reveals that sports-related contracts accounted for approximately 70% of Kalshi’s trading activity between February 25 and May 17, with a spike to 75% following the launch of single-game March Madness contracts on March 18. The complaint claims that Kalshi’s earnings from sports-related contracts during this timeframe surpassed those of regulated sportsbooks.

Kalshi argues that its contracts fall under the regulatory scope of the U.S. Commodity Futures Trading Commission (CFTC), a federal entity overseeing prediction markets, rather than state gambling authorities.

“Massachusetts is attempting to stifle Kalshi’s innovations by relying on antiquated laws and concepts,” a spokesperson for the company remarked, asserting that Kalshi is “prepared to defend its technology once more in a court of law.”

Last week, Kalshi informed CNBC that wagers totaling $439 million had been placed on NFL contracts via its platform. The company is also battling legal challenges in other jurisdictions, including a case in which it petitioned the 3rd Circuit Court of Appeals after New Jersey attempted to cease its operations.