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A class action lawsuit filed in Alabama against Kalshi for what the plaintiffs claim is an illegal sports betting website. Alabama is notoriously strict with its gambling laws, with it being outlawed in most cases.
In this case, traditional sports betting is not allowed under state law. Platforms such as Kalshi and Polymarket operate by offering event-based contracts that are classified as trading activities rather than sports betting. Because these products fall under federal commodity regulation, they are overseen by the CFTC rather than state gambling authorities, although their structure and terminology may be similar to 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 one of the strictest anti-gambling laws in the US; over 40 casino sweepstakes lawsuits have been filed). This is the 1st PM case filed by AL. pic.twitter.com/lxR6hJSkpS
– Daniel Wallach (@WALLACHLEGAL) January 30, 2026
However, there may be a new issue in the way of a class action lawsuit. In a recent statement by the CFTC Chairman, Michael S. Seligshows that the government body will now help markets with legal problems in the country.
The move was also celebrated by the Coalition for Prediction Markets.
It marks the first time a case like this has been filed in Alabama, which sports betting attorney Daniel Wallach pointed out is particularly litigious in the gambling scene. More than 40 lawsuits regarding sweepstakes casinos have been filed in the state, which has a strong hold on banning most forms of gambling.
Kalshi in the firing line amid the war against the prediction markets
Kalshi has come under fire from other sources across the country in recent months, as it pushes sports betting. Under the guise of “sports contracts,” prediction markets have been able to enter states that are highly regulated regardless of laws.
Washington is banned prediction markets in December of similar concerns. Nevada also stripped DraftKings and Flutter of their operating licenses, as they moved away from the prediction markets.
Alabama used to be destruction in 2025 in regular gambling, with many arrests above the machines or illegal methods. It looks more and more likely that the prediction markets could get the boot unless the CFTC enters the fray.
Featured image: Wikicommons
The post The Alabama class action lawsuit aims to unseat Kalshi’s sports betting push first appeared in ReadWrite.
