Rhode Island’s Attorney General, Peter F. Neronha, initiated legal action against prediction market operators Kalshi and Polymarket in state court on Thursday. He claims that their sports event contracts breach the state’s gambling regulations, operating similarly to conventional sports betting.
The lawsuit, submitted to the Rhode Island Superior Court, signifies a new phase in the escalating legal struggle involving U.S. states versus prediction market platforms that provide contracts linked to sports outcomes and athlete performances.
“There is no meaningful distinction between sports betting and ‘events contracts’ in this context,” stated Neronha in a press release. “Both Kalshi and Polymarket are aware of this fact, and so are we.” He further noted, “Rhode Island law places strict regulations on gambling for legitimate reasons, and we contend that Kalshi and Polymarket are circumventing these laws.”
The legal filing asserts that the contracts from these platforms mirror sports bets, allowing users to select “yes” or “no” concerning actual outcomes, thereby earning fixed payouts for accurate predictions and trading contracts associated with games and player performances.
“The conclusion is unavoidable: Kalshi and Polymarket operate, appear, and are indistinguishable from gambling because they are, in fact, gambling,” the complaint emphasizes.
This lawsuit follows an anticipatory legal action taken by Kalshi against Rhode Island to prevent possible enforcement actions from the state.
“The Attorney General of Rhode Island has declined to confirm that the state will abstain from enforcement,” Kalshi mentioned in its legal submission. “This statement illustrates Rhode Island’s perception of Kalshi’s event contracts as illegal under state law and its intention to act swiftly against Kalshi’s federally regulated operations.”
Rhode Island argued that these prediction markets negatively impact state gaming revenue and consumer protection. According to the lawsuit, sports wagers in the state decreased by 8% from 2024 to 2025.
Neronha claimed that these platforms avoid the tax responsibilities that apply to licensed online sportsbook operations in the state.
“While these private companies continue to profit disproportionately from hardworking individuals, the state’s third-largest revenue stream is adversely impacted, leading to fewer funds for essential programs that benefit Rhode Islanders every day,” he added.
The lawsuit includes allegations that Kalshi and Polymarket lack necessary protections akin to those mandated for licensed sportsbooks, potentially heightening gambling-related risks.
“Moreover, we assert that these platforms grant unrestricted access to individuals prone to problem gambling, which increases the likelihood of severe consequences related to gambling addiction,” Neronha stated.
Rhode Island is pursuing a court ruling to declare the companies as promoters of gambling according to state law, alongside a request for a permanent injunction, restitution, and disgorgement.
Kalshi is also under legal or regulatory scrutiny in other jurisdictions, including Arizona, Massachusetts, Michigan, Nevada, and Washington.
Earlier this month, U.S. District Judge John C. Coughenour remanded Kalshi’s case in Washington back to state court, ruling that gambling regulation falls within state jurisdiction. Kalshi had tried to transfer the case to federal court.
In Arizona, Attorney General Kristin Mayes filed criminal misdemeanor charges against Kalshi, alleging the company operated an unlicensed gambling business. However, state proceedings are currently halted due to an injunction.