Kalshi has formally demanded the removal of an advertising campaign by a watchdog that accuses the company of operating like a sportsbook while presenting itself as a federally regulated financial exchange.
A cease-and-desist letter sent May 20 to the operators of KalshiLies.com claims watchdog group FairPredicts published “false, misleading, defamatory, and commercially disparaging statements” about Kalshi and related businesses. The letter was signed by Kalshi General Counsel Richard Heaslip and attorney Maria Vouterakou.
Earlier this week, FairPredicts launched a Washington advertising push targeting the prediction-market industry. The nonprofit describes itself as a “nonpartisan market integrity watchdog” focused on regulation, transparency, and consumer protections tied to event-based trading platforms.
One ad circulating on transit placements and mobile billboards asked: “If Kalshi is not the house, why do they win when you lose?”
FairPredicts argues that Kalshi Trading LLC, an affiliated market-making firm, profits when customers lose money and effectively behaves like “the house” inside the exchange. Journalist Miranda Nazzaro reported the campaign involved a six-figure advertising purchase timed to coincide with rising congressional attention on prediction markets.
Kalshi rejected those allegations in unusually sharp terms. The company said its affiliated trading operation represents “less than 1% of overall sports trading volume on the platform” and “does not systematically participate in every trade.” The letter also stated Kalshi operates “at a negative P&L” rather than generating sportsbook-style profits from user losses.
Kalshi issues cease-and-desist against watchdog following campaign
Kalshi continues battling several states that argue sports-event contracts resemble unlicensed gambling products rather than federally protected financial instruments. This week, the company sued Rhode Island regulators.
Lawmakers have also intensified questions surrounding insider trading and market integrity. A recent Senate hearing examining sports betting and prediction markets explored concerns involving youth access, manipulation risks, and whether event contracts blur the line between investing and gambling.
Kalshi recently tightened restrictions preventing politicians, campaign staffers, athletes, and league employees from trading certain contracts tied to events where they could possess nonpublic information.
Federal prosecutors have also brought what is believed to be the first criminal insider-trading case connected to prediction markets. A U.S. soldier accused of using confidential information to place Polymarket bets recently pleaded not guilty, adding fresh attention to regulatory gaps surrounding the industry.
FairPredicts has continued accusing Kalshi of weak anti-money-laundering safeguards, misleading advertising, and conflicts between retail traders and affiliated liquidity providers. Kalshi’s legal notice warned the campaign could expose organizers to defamation, unfair competition, and tortious-interference claims while demanding preservation of communications, funding records, and analytics data.
Featured image: FairPredicts.com
