Attorney General Neronha sues Kalshi and Polymarket for unlawfully conducting sports gambling in Rhode Island
Published on Thursday, May 21, 2026
Attorney General Peter F. Neronha today announced a lawsuit against Kalshi and Polymarket in Rhode Island Superior Court asking for a declaration that Kalshi’s and Polymarket’s sports-related “event contracts” amount to sports betting that is subject to Rhode Island state gambling laws.
“There is no substantive difference between sports betting and ‘events contracts’ in this context; Kalshi and Polymarket know that, and we know that,” said Attorney General Neronha. “The problem here is that Rhode Island State law heavily regulates gambling, for good reason, and we allege that Kalshi and Polymarket are evading our laws. And Rhode Islanders are losing out. While these private companies continue to profit exponentially off hard-working people, the State’s third largest revenue stream is detrimentally affected, which means less money to fund critical parts of programs that serve Rhode Islanders every day. Further, we allege that these platforms offer those susceptible to problem gambling unfettered access, increasing the potential for the devastating effects of gambling addiction. We demand Kalshi and Polymarket stand down, abide by our state laws, and disgorge their profits, and this lawsuit is the first step towards that goal.”
Web-based “prediction markets” like the ones offered by Kalshi and Polymarket allow Rhode Islanders to place wagers on the outcome of future events, including sports matches, through websites and mobile apps. Specifically, these platforms allow users to take monetary positions on real-world events by purchasing “event contracts” that are structured as binary options: bettors buy “yes” or “no” positions on whether an event will occur (“yes”) or will not occur (“no”). Users receive a fixed payout if they are correct and nothing if they are not. Though this “event contracts” structure may technically differ from a traditional sportsbook, the complaint alleges that they are fundamentally the same: as with a sportsbook, Kalshi and Polymarket allow Rhode Islanders to bet on the outcome of sports matches and player performances. By consequence, the complaint alleges, they are subject to Rhode Island’s gambling laws.
As alleged in the complaint, Kalshi and Polymarket not only function as betting platforms, but also adopt the design and terminology of traditional gambling operations. For example, Kalshi prompts users to gamble with leaderboards and constant updates on how other users are placing bets. Such design choices have long been known to encourage addictive gambling behavior. Moreover, Kalshi has repeatedly referred to its products as “betting” and “wagering” both in marketing and litigation. Kalshi has argued before the D.C. Circuit that sports event contracts are “casino gambling.” These details affirm that Kalshi and Polymarket are exactly what they say they are, and exactly what they are designed to be: a platform for illegal gambling.
Rhode Island State regulation of gambling is enshrined in two provisions of the constitution, and multiple chapters of the Rhode Island general laws. First, Article 6, Section 15 of the Rhode Island Constitution prohibits all “lotteries” in Rhode Island except those operated by the State (or previously permitted by the General Assembly) and subjects them “to the proscription and regulation of the General Assembly.” Second, Article 6, Section 22 of the Constitution requires statewide and local referenda before expanding the types or locations of “gambling” within the State. Additionally, the Rhode Island General Assembly has enacted a statutory scheme authorizing and outlawing certain gambling activities.
By circumventing Rhode Island State law, we allege that Kalshi and Polymarket are harming Rhode Islanders’ mental and financial well-being. As prediction markets have exploded, so too have the harms they pose to Rhode Islanders. Gambling addiction is a clinically recognized behavioral addiction, and purchasing an event contract can affect the brain much like taking an addictive substance. Online and app-based betting facilitated by prediction markets is easily accessible which leads to widespread use. Indeed, studies indicate that online gambling has the highest odds of problem gambling, with up to 15.8% of users exhibiting compulsive behavior.
Further, the State depends heavily on RILOT revenue. Sports betting alone has brought the State $2.8 billion in revenue since it was legalized in 2019. RILOT has already observed an impact from the expansion of prediction markets, with bets decreasing 8% from 2024 to 2025. Thus, RILOT is particularly concerned about preserving its authority to regulate and collect revenue from the sports wagers for which Kalshi and Polymarket are now competing.
The complaint seeks a declaration that Kalshi’s and Polymarket’s offering of sports-related “events contracts” on “prediction markets” are (1) “gambling” that is subject to the constitutional voter referendum requirement; as well as (2) “casino gaming” and (3) “online sports wagering,” which are subject to Rhode Island State Lottery’s (RILOT) regulation and operational control. The Office also seeks a permanent injunction against Kalshi’s and Polymarket’s offering sports-related event contracts on prediction markets as well as restitution and disgorgement.
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