Alabama class action lawsuit aims to take down sports betting push by Kalshi
A class action lawsuit has been filed in Alabama against Kalshi over what the plaintiffs claim is an illegal sports wagering website. Alabama is notoriously strict with its gambling laws, with it 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 event-based contracts that are classified as trading activity rather than sports wagering. Because these products fall under federal commodities regulation, they are overseen by the CFTC instead of state gambling authorities, even though their structure and terminology may resemble aspects of betting.
NEW: Kalshi has been hit with a class action lawsuit in Alabama federal court for operating an illegal sports betting website. (AL has among the strictest anti-gambling laws in the US; more than 40 sweepstakes casino lawsuits already filed). This is the 1st PM case filed in AL. pic.twitter.com/lxR6hJSkpS
— Daniel Wallach (@WALLACHLEGAL) January 30, 2026
However, there might now be a new issue in the way of the class action lawsuit. In a new set of remarks by the CFTC Chairman, Michael S. Selig, indicates that the government body would now assist markets with legal problems in the country.
The move has been celebrated by the Coalition for Prediction Markets as well.
This marks the first time a case like this has been filed in Alabama, which sports betting lawyer Daniel Wallach points out is particularly litigious in the gambling scene. More than 40 lawsuits regarding sweepstakes casinos have been filed in the state, which again has a firm grip on banning most forms of gambling.
Kalshi in the firing line amid battle against prediction markets
Kalshi has come under fire from other sources across the country in recent months, as it pushes into sports betting. Under the guise of “sports contracts,” prediction markets have managed to infiltrate heavily controlled states regardless of the laws.
Washington banned prediction markets in December over similar concerns. Nevada has also stripped DraftKings and Flutter of their licenses to operate, as they drift further towards prediction markets.
Alabama has been cracking down heavily in 2025 on regular gambling, with multiple arrests over machines or illicit methods. It’s looking more and more likely that prediction markets could be getting the boot unless the CFTC enters the fray.
Featured image: Wikicommons
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