Rhode Island Attorney General Files Lawsuit Targeting Kalshi and Polymarket Over Event Contracts
Attorney General Peter Neronha filed a lawsuit in Providence County Superior Court that alleges prediction market platforms Kalshi and Polymarket unlawfully offer sports betting to Rhode Island residents by presenting it as event contracts and thereby bypass the state's regulated sports betting system which directs revenue through a single state-sponsored platform and the complaint details how these offerings operate outside established oversight mechanisms while residents participate in markets tied directly to sporting outcomes.
Details of the State Court Filing
The filing outlines specific instances where both platforms allowed users in Rhode Island to place wagers framed as contracts on athletic events and Neronha's office states that these activities mirror traditional sports betting yet avoid the licensing and revenue-sharing requirements that apply to authorized operators in the state and the lawsuit seeks to halt such practices while clarifying that the platforms must comply with existing gambling statutes rather than operate under alternative regulatory interpretations.
Officials note that Rhode Island maintains a controlled framework for sports betting which funnels all activity through designated channels to support state programs and the complaint emphasizes that event contracts involving sports results fall under this same regulatory umbrella according to state law and evidence presented in the filing includes examples of markets that directly reference game scores and player performances which the attorney general's office classifies as prohibited betting products.
Kalshi's Preemptive Federal Court Action
Kalshi initiated its own lawsuit in federal court just hours before the state filing and the platform's complaint requests an injunction to prevent enforcement actions while it argues that federal regulatory oversight through the Commodity Futures Trading Commission governs these products and not state gambling authorities and this timing created a dual-track legal situation where both sides seek judicial clarification on jurisdiction and applicable rules.
The federal suit contends that event contracts qualify as financial instruments under national standards which preempt conflicting state measures and Kalshi representatives maintain that their platform adheres to federal guidelines established for prediction markets while the state filing counters that sports-related contracts cross into unauthorized gambling territory regardless of federal classification and observers note this overlap highlights tensions between federal and state authority in emerging market categories.
Background on State-Regulated Sports Betting in Rhode Island
Rhode Island operates its sports betting through a centralized platform designed to capture revenue for public benefit and the system requires all operators to partner with state-approved entities to ensure compliance with licensing fees and tax distributions and this structure emerged after legislative approval of expanded gaming options which aimed to balance consumer access with fiscal oversight and the attorney general's lawsuit positions the prediction platforms as operating outside these boundaries by using contract terminology to describe equivalent transactions.
Data from state reports indicate that the regulated channel generates consistent contributions to education and infrastructure funds while unauthorized alternatives divert potential resources and the complaint references how residents access Kalshi and Polymarket interfaces that accept deposits and settle wagers on sports events in real time and these mechanics align with definitions of betting under state statutes according to the filing and enforcement efforts seek to restore uniformity across all sports-related offerings available to Rhode Island users.
Arguments Presented in the Legal Documents
teh state complaint details how event contracts on sports outcomes function as direct wagers because participants predict results and receive payouts based on accuracy and Neronha's office asserts that such activities require authorization under the state's gambling control framework regardless of how platforms label the products and supporting materials include screenshots and transaction records that demonstrate user engagement with sports markets on both Kalshi and Polymarket and the lawsuit requests declaratory relief to affirm that these practices violate existing prohibitions.
Kalshi's federal filing meanwhile stresses the platforms' compliance with commodity regulations and it cites prior federal approvals for similar contracts that do not involve sports and the document argues that state intervention would disrupt national market operations and create inconsistent standards across jurisdictions and court records show both cases remain in early stages with motions expected to address questions of preemption and the scope of state authority over resident access.
Current Status and Next Steps in the Proceedings
As of May 2026 the dual filings continue through preliminary hearings where judges examine jurisdictional claims and the state seeks to enforce its regulatory model while the platforms pursue protection from enforcement and legal teams on both sides prepare arguments centered on definitions of gambling versus financial contracts and updates from court dockets indicate scheduled conferences to determine whether the cases proceed separately or require coordination and participants in these markets monitor developments for potential changes in access or product availability.
State officials continue to emphasize that all sports betting activity must route through approved channels to maintain revenue integrity and platform operators respond by highlighting their adherence to federal standards that they say supersede local rules and the proceedings may establish precedents for how other states address similar prediction market offerings in coming months.
Conclusion
The lawsuit filed by Attorney General Peter Neronha alongside Kalshi's federal response creates a focused legal examination of how event contracts intersect with state sports betting regulations and the outcomes will clarify boundaries for platforms operating in Rhode Island while residents follow updates on compliance requirements and revenue structures and Attorney General Neronha sues Kalshi and Polymarket for unlawfully conducting sports gambling in Rhode Island remains the primary reference point for official details as the cases advance through the courts.