Kalshi Lawsuit Says Refer-A-Friend Texts Violate Washington Law

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A proposed class action lawsuit claims that Kalshi unlawfully sends “Refer a friend” text messages to Washington residents who have not consented to receive commercial texts from the prediction market operator.

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The 18-page lawsuit contends that Kalshi has violated the Washington Commercial Electronic Mail Act (CEMA) by enabling its users to act as agents on its behalf to send promotional texts containing sign-up links and offering free in-app rewards without obtaining a recipient’s consent.

Kalshi is a nationwide prediction market that allows users to buy and sell event contracts based on the outcome of various events. The case alleges that Kalshi seeks to grow its user base by incentivizing existing accountholders to invite their friends to join the platform with the promise of $10 to $25 awards that can be used for trading on Kalshi.

According to the suit, Washington law protects state residents from receiving unwanted commercial texts and requires companies to obtain clear, affirmative consent before sending marketing communications.

Related Reading: Class Action Lawsuit Claims Kalshi Illegally Runs Online Sports Betting Platform

According to the complaint, Kalshi provides “substantial assistance” to existing users in composing and sending its refer-a-friend text messages by streamlining copy-and-paste features, generating seamless invitation links, and directing users to send messages.

Although the text messages are sent by individual users and not the business, the lawsuit argues that these communications still constitute violations of CEMA due to Kalshi’s heavy involvement in their creation and transmission and its use of financial incentives.

“Kalshi does not obtain clear and affirmative consent prior to the sending of these text messages,” the complaint contends. “In fact, Kalshi does not communicate with the recipients prior to the texts being sent, much less obtain clear and affirmative consent.”

The lawsuit claims that Kalshi, as a massive commercial enterprise, is aware that sending unsolicited marketing messages to Washington residents without prior consent is unlawful. According to the complaint, the company can easily identify which phone numbers are associated with Washington residents and whether consent has been obtained.

“Kalshi benefits from the sending of illegal text messages to Washington residents, because it can advertise its products, target new customers, and make money from new users in Washington,” the filing summarizes.

The Kalshi class action lawsuit seeks to represent all individuals who received a Kalshi “Refer a friend” text message to their cell phone while residing in Washington and had not given prior clear and affirmative consent, during the applicable statute of limitations period.

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