"Sports wagering comes with significant risk of addiction and financial loss" and must be strictly regulated to reduce public health consequences, Campbell said.

Prediction markets operate like financial futures markets, allowing participants to buy and sell contracts based on their expectations. During the last election, for example, people could buy contracts for President Donald Trump or former vice president Kamala Harris, with the contract prices -- or odds -- set according to which candidate investors favored.

Trump buyers cashed in their contracts. Harris buyers lost their investment.

Kalshi, a New York-based prediction market, uses a similar approach to allow people to bet on the outcome of sporting events.

Jordan Maynard, chair of the state Gaming Commission said in a statement that prediction market companies "are expanding into sports wagering while neglecting age restrictions, player protection programs, state taxes, and other consumer protections."

Maynard lauded the efforts of the attorney general's office "to enforce the law and hold these companies accountable to Massachusetts' rigorous standards."

In its 43-page suit, the attorney general's office alleges that Kalshi uses an online "exchange" to offer sports wagering, under the guise of "event contracts" on sporting events, including point spread contracts, and over-under contracts, according to the suit.

The "event contracts" closely resemble sports wagers offered by licensed operators, the suit says. Kalshi promotes its sports wagering offerings on television and social media and allows "trading" through retail trading platforms such as Robinhood, the suit says.

Kalshi has not applied for or received a Massachusetts sports wagering license, according to the lawsuit.

In response to the suit, a Kalshi spokesperson said in a statement that the company "offers its users a fair, transparent, federally-regulated and nationwide marketplace."

"Rather than engage in dialogue with Kalshi as many other states have done, Massachusetts is trying to block Kalshi's innovations by relying on outdated laws and regulations," the spokesperson said. "Prediction markets are a critical innovation of the 21st century and all Americans should be able to access them."

In the suit, the office of the attorney general says Kalshi's sports wagering operation bypasses consumer protections that are required of licensed sports wagering operators. Kalshi has not undergone a comprehensive compliance review by the gaming commission, the suit says.

Kalshi allows users between the ages of 18 and 21 to bet on its platform, when the legal age for sports wagering online in Massachusetts is 21, the suit says.

AG Campbell sues 'prediction market' company for lack of license for online sports betting - The Boston Globe