Did Your Child Lose Money on Kalshi? A California Attorney's Guide to the Investigation
Our law firm is investigating whether certain online betting, fantasy sports, prediction market, or casino-style apps may have failed to prevent minors from creating accounts, depositing funds, or participating in real-money contests.
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Disclaimer: This information is provided for educational purposes and does not constitute legal advice. Each case is unique, and outcomes depend on specific facts and circumstances. Consult with a qualified California employment attorney to discuss your individual situation.
Attorney Advertising. This page describes a legal investigation. It is not legal advice. Reading it does not create an attorney-client relationship with Setareh Law Group.
If you landed here after spotting an unfamiliar charge on a card, or after your teenager became unusually defensive about their phone, you are not the first parent to find this page this week. Most parents do not notice until the second or third deposit. The shame of bringing it up is part of how these products work. The legal questions are real, and so is the path forward.
Key Takeaways
- Kalshi is a federally regulated event-contracts exchange that requires users to be 18, even though every state with legal online sports betting sets the minimum age at 21.
- The Massachusetts Attorney General sued Kalshi in September 2025 and identified Kalshi’s acceptance of 18-to-20-year-old users as the central consumer-protection failure. (Mass.gov press release)
- A Suffolk Superior Court judge issued a preliminary injunction on January 20, 2026 blocking Kalshi from accepting sports event contracts from Massachusetts residents. (Mass.gov press release)
- A federal judge in Nevada dissolved Kalshi’s earlier preliminary injunction on November 24, 2025, opening the door for the Nevada Gaming Control Board to enforce its cease-and-desist order. (Kalshiex, LLC v. Hendrick, 2:25-cv-00575)
- A private class action filed in Suffolk Superior Court on April 22, 2026 alleges Kalshi operates an unlicensed sportsbook in Massachusetts. The lead plaintiff says he lost tens of thousands of dollars.
- Setareh Law Group is reviewing potential recovery claims under California Family Code § 6710 and related consumer-protection statutes for families whose minor children opened or funded Kalshi accounts.
Investigation thesis. Kalshi is the only major U.S. real-money wagering platform that lawfully treats 18-year-olds as adult customers in states where licensed sportsbooks must turn away anyone under 21. The Massachusetts Attorney General has formally identified that 18-to-20 trading window as the central consumer-protection failure. That gap is what makes Kalshi different from BetMGM, DraftKings, and FanDuel. It is also what makes the legal questions for parents of minor users different.
How we researched this page. Our team reviewed Kalshi’s published Member Agreement and Help Center pages, the Massachusetts Attorney General’s filings and press releases in Commonwealth v. KalshiEX LLC (Suffolk Sup. Ct. No. 2584CV02525), the Nevada federal docket in Kalshiex, LLC v. Hendrick (D. Nev. 2:25-cv-00575) on CourtListener, the Third Circuit’s April 6, 2026 ruling in KalshiEX, LLC v. Flaherty, the National Council on Problem Gambling’s March 2026 NGAGE 3.0 survey, the American Psychiatric Association’s gambling disorder page, and California statutes accessed through the official California Legislative Information portal.
The Kalshi Investigation: What Setareh Law Group Is Reviewing
Setareh Law Group is a California plaintiffs’ firm headquartered at 420 N Camden Dr, Beverly Hills, CA 90210. The firm is led by founding partner Shaun Setareh and litigates class actions and consumer-protection matters on a contingency-fee basis.
No court has found that Kalshi violated California law with respect to minors. State enforcement actions and reporting in other jurisdictions have raised concerns that Kalshi’s platform reached users below the legal sports-wagering age. Those concerns inform this review.
How Kalshi Operates as a CFTC-Regulated Exchange — Not a Sportsbook
Kalshi is a Designated Contract Market registered with the Commodity Futures Trading Commission since 2020. That status lets it list “event contracts,” which are binary yes-or-no derivatives tied to the outcome of real-world events. In Kalshi’s legal vocabulary, users do not place “bets.” They buy and sell contracts that pay one dollar if the event occurs and zero if it does not.
Kalshi’s regulatory posture rests entirely on that distinction. Federal law gives the CFTC exclusive jurisdiction over swaps traded on a Designated Contract Market under 7 U.S.C. § 2(a)(1). Kalshi argues that its sports event contracts are swaps, so state gaming regulators have no authority to license, regulate, or restrict them.
Senior Circuit Judge Jane Richards Roth captured the counterargument plainly in her dissent from the Third Circuit’s recent ruling. In her view, Kalshi’s “offerings were virtually indistinguishable from the betting products available on online sportsbooks, such as DraftKings and FanDuel.” That tension between Kalshi’s federal swaps-exchange identity and the user experience of placing a sports wager now sits in front of multiple federal appellate
The 18 vs. 21 Age Gap That Sits at the Center of Kalshi's Problem
Kalshi’s Member Agreement and Help Center require users to be at least 18 years old, or the age of majority in their state, whichever is higher. In most U.S. states, that means an 18-year-old can open a Kalshi account and trade contracts on the outcomes of NFL, NBA, NCAA, and other sporting events.
In every state that has legalized online sports betting, the licensed-sportsbook minimum age is 21. The Massachusetts Attorney General put the consequence in writing in her September 2025 complaint: “Kalshi allows users between the ages of 18-21 to bet on its platform, when the legal age for sports wagering online in Massachusetts is 21.” (Mass.gov, September 12, 2025)
California has not legalized online sports betting, which makes the gap matter in a different way for families here. A California 18-year-old can lawfully be onboarded by Kalshi under federal law. A California 16-year-old who lied about their age and used a parent’s ID is in a different category. So is the contract that 16-year-old signed.
Statute spotlight: California Family Code § 6710: “Except as otherwise provided by statute, a contract of a minor may be disaffirmed by the minor before majority or within a reasonable time afterwards.” In plain English, a California contract signed by someone under 18 can usu
ally be cancelled by that minor, and money paid under it may be recoverable.
Named Lawsuits and State Enforcement Actions Against Kalshi (2025–2026)
- Massachusetts. Attorney General Andrea Joy Campbell sued Kalshi in Commonwealth v. KalshiEX LLC, Suffolk Sup. Ct. No. 2584CV02525, on September 12, 2025. Judge Christopher Barry-Smith granted a preliminary injunction on January 20, 2026, prohibiting Kalshi from offering sports event contracts to Massachusetts residents pending licensure by the Massachusetts Gaming Commission. (Mass.gov press release) A separate class action, Smith v. KalshiEX LLC, was filed in the same court on April 22, 2026, alleging Kalshi operated an unlicensed sportsbook and seeking disgorgement of fees and losses on behalf of Massachusetts traders.
- Nevada. Kalshiex, LLC v. Hendrick, D. Nev. 2:25-cv-00575. Chief Judge Andrew P. Gordon initially granted Kalshi a preliminary injunction on April 9, 2025. He dissolved that injunction on November 24, 2025, after concluding Kalshi’s reading of the Commodity Exchange Act was “strained.” The Ninth Circuit, Case No. 25-7516, is hearing Kalshi’s appeal consolidated with related actions. (CourtListener)
- New Jersey. Kalshiex, LLC v. Flaherty, D.N.J. 1:25-cv-02152. Judge Edward Kiel granted Kalshi a preliminary injunction in April 2025. The Third Circuit affirmed 2 to 1 on April 6, 2026, with Chief Judge Michael Chagares writing the majority and Senior Judge Roth dissenting. The ruling is the first federal appellate decision on the preemption question.
- Maryland. The Maryland Lottery and Gaming Control Commission issued a cease-and-desist order. Kalshi sued and lost at the district court level. The Fourth Circuit appeal is pending.
- Other states. Regulators in Arizona, Illinois, Montana, Ohio, and Washington have issued cease-and-desist letters, producing parallel litigation in state and federal courts. Tribal governments in California and Wisconsin have also filed suit.
How a Minor Could Bypass Kalshi's KYC Verification
Several failure modes can still let a minor open or use an account:
- Borrowed adult identity. A minor uses a parent’s or older sibling’s driver’s license and date of birth, sometimes with that adult’s knowledge. The KYC system verifies the document, not the person holding the phone.
- Account sharing after onboarding. An adult opens a verified account, then hands over the device or credentials.
- Address and bank-account inheritance. A minor on a family’s shared banking app funds an existing adult account.
- Manual review queue. Kalshi’s own materials describe a manual review process taking up to three business days for documents submitted by email. That window creates time during which mismatched information is reviewed by a human rather than rejected at intake.
What Underage Gambling on Kalshi Does to Kids and Families
Underage gambling rarely shows up as a single dramatic event. It shows up as a slow change a parent notices in pieces. Our firm has reviewed account histories where a teenager placed small contracts for weeks before a single losing weekend triggered the conversation that should have happened months earlier.
Behavioral signs tend to appear together. A teenager’s behavior typically shifts in recognizable ways once gambling becomes regular. Common signs include new secrecy about phone or app use, deleted browser history, irregular sleep, an unexplained drop in grades, requests to borrow money, sudden interest in scores or point spreads, and asking to “check the game” at unusual hours. The National Council on Problem Gambling has tracked these patterns for years and lists them in its public problem-gambling FAQ. Any one signal can be nothing. A cluster is usually worth a conversation.
Psychological effects can be serious. The American Psychiatric Association classifies gambling disorder as a behavioral addiction under the DSM-5. A diagnosis requires at least four of nine criteria over twelve months, including chasing losses, needing larger amounts to feel the same excitement, and lying to family members about gambling. (Psychiatry.org: What is Gambling Disorder?) Adolescent-onset gambling has been associated with higher progression rates to disordered gambling than adult-onset gambling, a pattern documented in peer-reviewed national surveys. (Welte et al., national U.S. survey, 2014) The NCPG-Harris national survey released in March 2026 also found that 33 percent of adults aged 21 to 44 reported placing a sports bet before turning 21. (NCPG, March 2, 2026)
Family-level effects often follow. Money is the first cost a parent notices. Trust is the second, and it lasts longer. Siblings can absorb attention shifts they did not cause. Financial harm cascades when a teenager uses a parent’s card, opens a checking account against shared credit, or borrows from a relative. Many families do recover, especially when the conversation happens early and the resources are real.
Resources. The National Problem Gambling Helpline (1-800-GAMBLER) is free, confidential, and available 24 hours a day, 7 days a week. (NCPG helpline page) Calling does not commit a family to anything. It connects callers to state-specific treatment options.
The Infancy Doctrine: Why a Minor's Kalshi Account May Be Voidable in California
California Family Code § 6710 codifies a centuries-old common-law principle. A person under 18 generally cannot be bound to a contract. The Kalshi Member Agreement is a contract. A California minor who clicked “I agree” can typically cancel that agreement, a legal step called “disaffirmance,” either before turning 18 or within a reasonable time after. The minor can also ask for restitution of what was paid under the agreement.
Three things matter about how § 6710 actually works here:
- Disaffirmance is not automatic. The minor, or a parent on the minor’s behalf, must communicate the decision to cancel. Documentation matters.
- The statute’s exceptions are narrow. Section 6710’s “except as otherwise provided by statute” language has been read by courts to cover specific carve-outs, including approved entertainment contracts and certain “necessaries.” A sports event contract is neither.
- The remedy is restitution, not damages. A minor who disaffirms is typically entitled to return of consideration paid, not punitive recovery.
Beyond § 6710, California’s Unfair Competition Law (Cal. Bus. & Prof. Code § 17200) may provide a separate vehicle where a business practice is unlawful, unfair, or fraudulent. Accepting funds from an underage user, despite policies to the contrary, could potentially fit that frame.
Evidence to Preserve: A 72-Hour Action Checklist for Parents
Securing the device, account history, and bank records in the first 72 hours after discovery matters more than most parents realize. Records get overwritten. Apps get deleted. Memories blur.
- Secure the device. Do not delete the Kalshi app. Take screenshots of the home screen, the “Markets” tab, the “Portfolio” tab, and the “History” tab.
- Pull the account statement. From the Kalshi web interface, export the full trade and deposit and withdrawal history as a CSV or PDF. Save it twice, in two locations.
- Pull bank and card statements. Identify every transaction tagged Kalshi, KalshiEX, or routed through a third-party payment processor.
- Take photos of the ID used. If your child used a parent’s driver’s license or passport, note that and photograph the document.
- Save email and SMS verification messages. Phone-verification and email-verification timestamps establish when the account was opened.
- Write down what happened, in your child’s words. Memory fades. A contemporaneous note dated today is more reliable than a recollection in six months.
- Do not contact Kalshi support before consulting counsel. Statements made in support tickets can be used later. Communications through a lawyer are easier to manage.
- Preserve everything for at least four years. California’s statute of limitations for UCL claims is four years. The same is true for breach of contract. Do not throw anything away.
Statutes of Limitations and Where Recovery Claims Get Filed
Glossary: Terms You'll See on a Kalshi Account Statement
- Event Contract. A binary yes-or-no derivative listed on Kalshi tied to the occurrence or non-occurrence of a specified event.
- Designated Contract Market (DCM). A CFTC-registered exchange authorized to list certain derivatives. Kalshi has held DCM status since 2020.
- Self-Certification. The process by which a DCM submits a new contract to the CFTC and lists it for trading after a review period, absent an affirmative CFTC objection. Kalshi self-certified its sports contracts on January 24, 2025.
- Swap. A derivative contract whose value is tied to an underlying event, price, or measure. Whether Kalshi’s sports contracts qualify as “swaps” under 7 U.S.C. § 1a(47) is the central preemption question.
- CFTC Special Rule. 17 C.F.R. § 40.11 authorizes the CFTC to prohibit event contracts it finds contrary to the public interest, including those involving gaming.
- KYC. Know Your Customer, the identity-verification process that includes ID upload and SSN collection.
- Disaffirmance. A minor’s legal act of cancelling a contract and demanding return of consideration paid.
Talk to a California Lawyer About a Kalshi Account
Contact us today:
📞 Phone: 310-888-7771
✉️ Email: help@setarehlaw.com
🌐 Address: 420 N Camden Dr, Beverly Hills CA, 90210
Disclaimer: This information is provided for educational purposes and does not constitute legal advice. Each case is unique, and outcomes depend on specific facts and circumstances. Consult with a qualified California employment attorney to discuss your individual situation.
Attorney Advertising / Disclaimer. This page is provided for informational and advertising purposes by Setareh Law Group, 420 N Camden Dr, Beverly Hills, CA 90210. No court has determined that Kalshi or KalshiEX, LLC violated California law with respect to minor users. Statements about pending or completed litigation are drawn from publicly available court records and government press releases as cited. Reading this page does not create an attorney-client relationship. Representation requires a signed engagement. Prior results do not guarantee any future outcome. This material complies with California Rules of Professional Conduct 7.1 through 7.3.
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