A class-action case has been lodged against Kalshi in a New York District Court.
Led by plaintiff Daniel Yee, the case is seeking to recover "hundreds of millions of dollars" that he claims Kalshi took from him illegally.
The case rests on Kalshi's promotional claim that "betting is now legal in all 50 states."
Yee, a resident of San Francisco, California, lays out the chain of events that he alleges led to an unlawful act.
He explains that in response to advertisements on social media, he was led to believe that gambling was now legal in California, where in fact it has been generally illegal since 1872.
Yee then alleges he made an account, something he says he would not have done had he not believed the practice was legal - later he lost $2,000 on the platform.
These losses, the case posits, are now liable to be reclaimed, because the contract formed between player and operator was built on false pretences and in order to facilitate unlawful gambling.
Under federal law, the case is seeking to create a nationwide class action that could include all who have ever made a loss using Kalshi.
The briefing of the case demands a trial by jury and claims that Kalshi has "acted with malice, oppression and fraud."
The federal and nationwide scope of this case breaks new ground in the ongoing legal action that is being taken against Kalshi and competitors in the market like Crypto.com.
In the introduction to this complaint the allegation is made that: "Kalshi's operations violate the specific laws of over two dozen additional states that prohibit gambling or expressly allow for the recovery of gambling losses."
This is a question that is already being litigated in a number of states and there is as of now, no definitive legal precedent for whether the law does consider this to be true.
How far this goes will largely depend on the legal backing that the plaintiff has, and whether this has strong legalistic foundations or is in fact more of a speculative effort to reclaim losses.
The case itself concedes that bringing together each and every user of Kalshi who has ever had a loss is impractical.
Whether this case has legs or not, it may add to the chorus of dissenting voices just enough to expedite some much-needed answers hanging over the predictions market sector.
A judge in Nevada this week rebuked the claim that prediction markets do not constitute gambling saying that "a pig in lipstick is still a pig"
