Kalshi has been hit with another class action lawsuit, this time in Illinois, as legal scrutiny around prediction markets continues to intensify in the United States.
The complaint was filed in the US District Court for the Northern District of Illinois on behalf of Illinois residents who lost money wagering on Kalshi’s platforms, invoking the state’s loss recovery statute, which allows private individuals to seek damages from alleged illegal gambling operators.
According to the filing, the plaintiffs argue that Kalshi’s event contracts constitute unlicensed gambling under Illinois law, despite the company’s positioning of its products as regulated prediction markets.
The lawsuit alleges violations of the Illinois Sports Wagering Act, the Illinois Criminal Code and state consumer protection statutes, while also seeking restitution under the Illinois Loss Recovery Act for individual losses exceeding $50.
The complaint further claims that Kalshi acted as the effective counterparty to customer wagers through affiliated market-making entities, disputing the company’s portrayal of its platform as peer-to-peer.
It also references a cease-and-desist letter issued by the Illinois Gaming Board in April 2025, which stated it had reason to believe Kalshi was engaging in unlicensed sports wagering activity within the state.
The Illinois case follows similar regulatory interventions in several other US jurisdictions. The complaint states that Kalshi has received cease-and-desist notices from regulators in states including New York, New Jersey, Nevada, Maryland and Ohio, reflecting broader uncertainty around how prediction markets intersect with existing gambling laws.
Kalshi has not publicly commented on the Illinois filing at the time of writing. The company has previously maintained that its contracts fall under federal commodities regulation rather than state-level gambling frameworks, an argument that has already been tested in ongoing legal disputes with US authorities.
In December 2025, Kalshi confirmed it was assessing Brazil as a potential future market, with Co-Founder Luana Lopes Lara stating that analysis of the regulatory environment was still at an early stage.
That expansion interest emerged alongside Kalshi’s growing reliance on sports-related markets, a segment that has attracted heightened regulatory attention due to its proximity to traditional betting.
Kalshi is also facing a separate class action in New York, where proceedings have been delayed while courts assess jurisdictional and regulatory questions surrounding prediction markets and event-based contracts
