Kalshi Sues Rhode Island; State Sues Kalshi and Polymarket

On Thursday Kalshi filed a federal lawsuit asking a court to block anticipated enforcement by Rhode Island officials. Hours later Rhode Island Attorney General Peter Neronha filed a separate complaint in Rhode Island Superior Court against Kalshi and Polymarket, alleging the platforms’ sports-related event contracts amount to unlawful sports betting.

Kalshi’s federal complaint says Rhode Island officials told the company during a May 20 meeting that they believed Kalshi’s event contracts violated state gaming law and would not promise advance notice before bringing enforcement. The filing quotes the meeting: “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.” Kalshi describes its markets as financial instruments used for hedging and research and cites Federal Reserve research that, according to the company, finds the markets provide a high-frequency, continuously updated benchmark for researchers and policymakers. Kalshi says it will seek emergency injunctive relief.

The state complaint filed by Neronha accuses Kalshi and Polymarket of effectively operating sportsbooks through contracts tied to sports outcomes. The complaint argues the platforms’ binary “yes” or “no” positions create products indistinguishable from legal sports betting and adds that certain platform features encourage gambling-like behavior. The filing states, “Kalshi prompts users to gamble with leaderboards and constant updates on how other users are placing bets.” The complaint also cites instances where the companies have used terms such as betting and wagering in prior statements and litigation.

Rhode Island’s filing cites financial and public-safety concerns. The state says the Rhode Island Lottery has seen an 8% decline in bets from 2024 to 2025 and links the platforms to an increased risk of problem gambling. The complaint seeks a declaratory judgment, a permanent injunction barring sports-related event contracts in Rhode Island, and restitution and disgorgement.

The competing filings set up a likely procedural fight over federal removal. Kalshi has filed preemptive federal suits in Utah and Iowa and has removed state-court cases in Massachusetts, Nevada and Washington. States have often filed emergency motions to remand, and courts in several cases have concluded the complaints were primarily state-law gambling claims and ordered remand. In Nevada a remand allowed regulators to obtain a preliminary injunction that temporarily blocked Kalshi from offering certain contracts; Kalshi has secured favorable federal rulings on preemption in other proceedings.

The company referenced public comments from Rhode Island Lottery Director Mark Furcolo describing the state’s investigation as “very active.” The next steps are likely to include Kalshi moving to remove the state lawsuit to federal court and Rhode Island seeking an emergency remand back to state court.