---
type: source
title: "Kalshi Class Action: Self-Excluded Massachusetts Gambler Sues Under 1710 Statute of Anne"
author: "Bettors Insider / Boston Globe / CDC Gaming"
url: https://bettorsinsider.com/news/2026/05/01/massachusetts-man-sues-kalshi-in-class-action-over-missing-self-exclusion-protections/
date: 2026-05-01
domain: internet-finance
secondary_domains: []
format: legal-action
status: processed
processed_by: rio
processed_date: 2026-05-01
priority: medium
tags: [prediction-markets, Kalshi, class-action, self-exclusion, Massachusetts, consumer-harm, Robinhood, gambling-regulation]
intake_tier: research-task
extraction_model: "anthropic/claude-sonnet-4.5"
---

## Content

**The case:** Nicholas Smith (Raynham, MA) filed a class action lawsuit on May 1, 2026 against Kalshi and Robinhood in Massachusetts for accepting sports wagers despite having no self-exclusion program.

**Facts:**
- January 25 – February 23, 2026: Smith lost "tens of thousands of dollars" placing sports wagers on Kalshi's mobile app and website
- Smith typically uses state voluntary self-exclusion programs to prevent himself from wagering
- Neither Kalshi nor Robinhood offered self-exclusion safeguards; neither checked Massachusetts's state voluntary exclusion list

**Legal theory — Statute of Anne (1710):**
The lawsuit invokes the "Statute of Anne," a British law from 1710 designed to protect gamblers from financial ruin by allowing them to sue to recover money lost in unlawful gambling. Massachusetts adopted this framework and allows gamblers to sue to recover losses from unlicensed gaming operations.

The Statute of Anne claim bypasses the preemption question: it doesn't argue Kalshi is subject to state licensing law (that's the CFTC preemption debate). It argues that because Kalshi was operating without a license (which it concedes — it disputes only whether a state license is required), any losses from that platform are recoverable regardless of whether federal law ultimately preempts state licensing requirements.

**Why Robinhood is co-defendant:** Robinhood hosts Kalshi's prediction markets on its platform. By co-naming Robinhood, the plaintiff creates exposure for the delivery infrastructure, not just the prediction market operator.

**Seeks:**
- Repayment of all amounts Smith and similarly situated class members lost on sports wagers
- Disgorgement of Kalshi's transaction fees, deposit/withdrawal fees, and profits
- Injunctive relief requiring Kalshi to cease sports wagers in Massachusetts without a license

## Agent Notes

**Why this matters:** The Statute of Anne class action introduces a DAMAGES track that operates independently of the CFTC preemption question. Even if CFTC ultimately wins the federal preemption argument (prediction markets are federally regulated, not state gambling), the Statute of Anne theory could allow plaintiffs to recover losses from the period when Kalshi was operating without state compliance. This creates liability exposure that can't be fully resolved even by winning the preemption case.

**This is a new legal attack vector:** All previous state actions (Massachusetts Superior Court injunction, Arizona criminal charges, CFTC lawsuits against states) focused on whether state enforcement is preempted going FORWARD. The Statute of Anne class action focuses on whether PAST losses are recoverable based on pre-adjudication operation without a state license.

**The Robinhood naming is strategically significant:** If the Statute of Anne theory succeeds, any platform that hosts or distributes prediction market contracts (brokerages, app stores, payment processors) faces potential co-defendant liability. This could deter distribution partnerships for DCM-regulated prediction market platforms.

**What surprised me:** The choice to use the Statute of Anne (1710) rather than a modern consumer protection statute. It's an archaic but potentially powerful mechanism — designed specifically to create private rights of action for gambling losses. Using it against a federally regulated derivatives exchange is novel and may not survive a motion to dismiss.

**What I expected but didn't find:** Any immediate Kalshi/Robinhood response to the class action filing (filed May 1 — too recent for response).

**KB connections:**
- [[Ooki DAO proved that DAOs without legal wrappers face general partnership liability making entity structure a prerequisite for any futarchy-governed vehicle]] — analogous "liability exposure from gap in legal form" pattern
- For MetaDAO: This litigation pattern (consumer harm class action under archaic statute) is specifically about sports betting platforms, NOT governance markets. MetaDAO's conditional governance markets involve governance token trading, not sports event contracts. No class action exposure on this theory for MetaDAO's current product.

**Extraction hints:**
1. "The Statute of Anne class action against Kalshi and Robinhood (May 1, 2026) introduces a damages liability track for prediction market operators that operates independently of CFTC preemption victory — even winning the jurisdictional argument doesn't eliminate historical liability for unlicensed operation during the litigation period" [confidence: speculative — novel legal theory, no precedent]
2. NOT a claim candidate for internet-finance domain directly — more relevant as a signal about the complexity of the regulatory landscape for DCM-registered prediction market platforms

**Context:** Filed the SAME DAY as Massachusetts SJC oral argument scheduling (May 4 announced) and the Reason.com federal/state analysis piece. May 1, 2026 is an unusually dense day for prediction market regulatory news.

## Curator Notes
PRIMARY CONNECTION: [[futarchy-based fundraising creates regulatory separation because there are no beneficial owners and investment decisions emerge from market forces not centralized control]]
WHY ARCHIVED: Introduces novel damages theory (Statute of Anne) that creates liability exposure independent of preemption outcome; Robinhood co-defendant creates distribution-partner liability signal; dated May 1, 2026 (same day as session)
EXTRACTION HINT: The "liability gap during litigation" framing — even a CFTC preemption win doesn't eliminate historical damages exposure for the unlicensed-operation period. This is a risk for any regulated prediction market platform operating in contested state jurisdictions.
