A class action trial was filed in Alabama against Kalshi for what the plaintiffs claim is an illegal sports betting website. Alabama is notoriously strict with its gambling laws, which are outright banned in most cases.
In this case, traditional sports betting is not permitted under state law. Platforms such as Kalshi and Polymarket operate by offering contracts based on events that are classified as commercial activities rather than sports betting. Because these products fall under federal commodity regulations, they are overseen by the CFTC rather than state gambling authorities, although their structure and terminology may resemble some aspects of gambling.
NEW: Kalshi has been hit with a class-action lawsuit in Alabama federal court for operating an illegal sports betting website. (AL has some of the strictest anti-gambling laws in the United States; more than 40 lawsuits against casinos have already been filed). This is the first PM case filed in AL. pic.twitter.com/lxR6hJSkpS
-Daniel Wallach (@WALLACHLEGAL) January 30, 2026
However, there may now be a new problem in the class action. In a new series of remarks from the CFTC Chairman, Michael S. Seligindicates that the government agency would now help markets facing legal issues in the country.
The move was also celebrated by the Coalition for Prediction Markets.
This is the first time a case like this has been filed in Alabama, which sports betting attorney Daniel Wallach said is particularly contentious in the gambling industry. More than 40 lawsuits involving sweepstakes casinos have been filed in the state, which once again has a firm grip on banning most forms of gambling.
Kalshi in the crosshairs amid battle against predictive markets
Kalshi has been criticized by other sources across the country in recent months as he ventures into sports betting. Under the guise of “sports contracts”, prediction markets have succeeded in infiltrating heavily controlled states, in defiance of the laws.
Washington banned prediction markets in December due to similar concerns. Nevada also stripped DraftKings and Flutter of their operating licenses, as they move more into prediction markets.
Alabama was repress strongly in 2025 on regular gambling, with multiple arrests on machines Or illegal methods. It seems increasingly likely that prediction markets could gain the upper hand unless the CFTC enters the fray.
Featured image: Wikicommons
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