Kalshi Faces Three Class Action Cases In A Single Lawsuit

Three separate class action cases against Kalshi have been merged into a single federal case filed as ‘In re Kalshi Sports Prediction Market Litigation.’ This move unifies similar legal arguments previously raised in different courts. 

The initial complaint was filed on October 16, 2025, by San Francisco resident Daniel Yee, who seeks to recover “hundreds of millions of dollars” that he alleges Kalshi took from users through misleading marketing campaigns.

Multiple plaintiffs challenge platform model

Following Yee’s complaint, two additional lawsuits were filed in New York district courts. Pelayo et al v Kalshi et al involves seven users alleging that Kalshi operates an illegal sports gambling platform rather than a prediction market. 

In January 2026, another group of plaintiffs including Hallman, Kravetz, Greenberg, Bee, and Gutta filed a federal suit, raising further legal arguments against Kalshi. These plaintiffs assert that Kalshi’s system is not peer-to-peer as it claims, but works more like a traditional “against the house” model because it relies on affiliated ‘market makers’ to provide liquidity for equity. Kalshi does not deny using market makers. The company has received investment from Jump Trading, which acquired stakes in both Kalshi and Polymarket to act in this capacity. 

Hallman et al argue that the presence of market makers undermines Kalshi’s attempts to distinguish itself from conventional sportsbooks in discussions with state gambling regulators.

Consolidation approved by court

All claims and arguments from Yee, Pelayo et al, and Hallman et al will be addressed within the consolidated litigation. The decision was approved by Judge Jennifer L. Rochon, in agreement with attorneys representing all plaintiffs and Matthew J. Laroche, Kalshi’s defense counsel. 

As part of the consolidation, the original Pelayo et al and Hallman et al cases are officially closed. The new unified structure allows the court and all parties to manage discovery, evidence, and legal arguments more efficiently. The outcome of this consolidated lawsuit will set a crucial precedent for how similar platforms structure their operations and engage with regulators.