Kalshi Faces $22 Billion Valuation Challenge in Massachusetts Court Over Sports Betting Classification

Grant Mainland, a lawyer representing Kalshi, faced a challenging day in court on May 4 when he appeared before the Massachusetts Supreme Judicial Court. His mission: to persuade the justices that Kalshi—despite advertising itself as the “first app for legal sports betting in all 50 states”—does not technically offer sports betting.

Mainland sought to overturn a lower state court injunction that prevented Kalshi from offering its “markets” related to sports within Massachusetts. These sports markets accounted for nearly 90% of Kalshi’s revenue in 2025, contributing to the company’s $1.5 billion in annualized revenue. Investors have shown strong confidence in Kalshi’s growth, as evidenced by the company’s recent $1 billion Series F funding round, which elevated its valuation to $22 billion—double its worth just six months prior.

For those unfamiliar with Kalshi, the platform enables users to profit by accurately predicting the outcomes of real-world events. Users can buy and sell contracts priced between 1 cent and 99 cents, which reflect the market’s estimated probability of an outcome occurring. When an event resolves—meaning the outcome either happens or does not—holders of winning contracts receive $1 per share. For example, if the Seattle Seahawks advance to the Super Bowl next year, those who purchased shares at 14 cents per share would realize a significant return.

Critics argue that Kalshi’s model closely resembles futures betting. In January, a lower court judge ruled that Kalshi’s “event contracts,” which cover everything from final scores to player props, function as an unlicensed sportsbook in Massachusetts. Judge Christopher Barry-Smith stated there was “no question” that requiring Kalshi to comply with state sports betting laws would protect “both public health and safety, and the Commonwealth’s financial interest.”

Kalshi’s Legal Defense: Swaps vs. Bets

Mainland’s arguments in Commonwealth of Massachusetts v. KalshiEX LLC mirrored Kalshi’s longstanding position regarding its sports-related business. The company asserts that, as an exchange regulated by the federal Commodity Futures Trading Commission (CFTC), it is not subject to state regulation. Additionally, Kalshi contends that its products are not “bets” but rather “swaps”—a type of derivative contract traditionally used by companies to hedge financial risks.

However, the Massachusetts Supreme Judicial Court appeared skeptical of these claims. During oral arguments, Justice Gabrielle Wolohojian interrupted Mainland, stating, “If we just zoomed up one level, ‘event contracts’ would not be conceptually incompatible with what we would historically understand to be a bet or wager.”

Justice Scott Kafker further expressed confusion, questioning Mainland’s assertion that buying and selling contracts on Kalshi is “completely different” from placing a wager with a sportsbook. The justices’ skepticism suggests that Kalshi may face an uphill battle in convincing the court that its operations do not constitute sports betting under state law.