Rhode Island Attorney General Peter Neronhahas filed lawsuits against Polymarket and Kalshi, demanding they cease offering prediction markets in the Ocean State.
Rhode Island currently offers online casino through Bally’s and online sports betting via Sportsbook Rhode Island, operated by IGT online and Bally’s via retail sportsbooks, yet Neronha said the Rhode Island State Lottery (RILOT), which regulates sports betting, has observed an 8% slump in bets from 2024 to 2025.
The AG linked the decline to the expansion of prediction markets and said RILOT was “particularly concerned about preserving its authority to regulate and collect revenue from the sports wagers for which Kalshi and Polymarket are now competing”.
Since its regulation in 2019, sports betting has generated $2.8bn in revenue in Rhode Island.
Prediction market platforms are regulated at the federal level in the US by the derivatives regulator, the Commodity Futures Trading Commission (CTFC), but Neronha, has sued Polymarket and Kalshi for unlawfully offering sports betting in the states through sports-related event contracts.
“There is no substantive difference between sports betting and ‘events contracts’ in this context; Kalshi and Polymarket know that, and we know that,” he said in a statement.
“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 programmes 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.”
Earlier this month, Bally’s was awarded the licence to offer online sports betting in state, a move that is set to end IGT’s monopoly.
Rhode Island imposes a 51% tax rate on gross gaming revenue for sports betting.
Several states have taken legal action against prediction market platforms in recent months.
Regulators in Washington, Michigan and Ohio have sent Kalshi and Polymarket, among other platforms, with either preliminary injunctions or fines for what they argue is the promotion of unlicensed sports betting products.
However, the CTFC filed a lawsuit against Minnesota earlier this week for banning prediction markets in the state.
Elsewhere this week, senior executives at Coinbase labelled prediction markets “bets” and “wagers”, in stark contrast to the trading rhetoric adopted by the likes of Polymarket and Kalshi.
The crypto exchange launched prediction markets via Kalshi at the start of the year.
The post Rhode Island AG sues Polymarket and Kalshi for “unlawfully” offering sports betting first appeared on EGR Intel.
Peter Neronha accuses the prediction market platforms of “evading our laws”, while insisting there is “no substantive difference between sports betting and events contracts”
The post Rhode Island AG sues Polymarket and Kalshi for “unlawfully” offering sports betting first appeared on EGR Intel.