Kalshi Turned Its Own Users Into a Spam Army Without Anyone’s Consent

EvilCorporations.com • Case No. 2:26-cv-1426 • Filed April 27, 2026 • Est. 7 min read

A class action filed in federal court says the prediction market platform used its “Refer a Friend” program to flood Washington residents with unsolicited commercial texts and built its system to make checking for consent physically impossible.

The Non-Financial Ledger

Nicholas Brown was at home in Ephrata, Washington on a Friday — February 6, 2026 — when his phone buzzed with a text message he never asked for. It wasn’t from a friend. It was a pitch for a prediction market app called Kalshi, sent via his contact’s number, packaged to look like a personal recommendation. The message was already written for the sender by Kalshi’s own system. The link inside it went straight to Kalshi’s servers. The image in the message was generated by Kalshi’s software, depicting money he could supposedly earn. None of this happened because his contact sat down and decided to tell him about a product they loved. It happened because Kalshi built a machine to turn people’s personal contact lists into a distribution network for its advertising — and pointed that machine at Washington State residents without asking a single one of them if that was okay.

There is something specific about receiving a text through someone you actually know. The personal channel gets hijacked. You look at the name above the message and for a moment you think it’s something real, something human. Then you realize it’s a corporate promotion dressed up to feel like a tip from a friend. That breach of the personal channel is not an accident in Kalshi’s system. It is the entire point. The “Refer a Friend” program exists to exploit the trust between people who know each other. Kalshi’s promotional machine runs on that trust without compensating for it, without disclosing to recipients that the message was generated by corporate software, and without asking whether the recipient wants any part of it.

Brown has no way to make it stop. The complaint states plainly that he had no opt-out mechanism at the time he received the text, and that he still has none. Future unsolicited Kalshi texts could arrive at any time through any contact in his phone who has a Kalshi account. He cannot block the source because the source is everyone he knows who uses the app. That ongoing exposure is what the complaint describes as an “imminent threat of future harm.” It is also a precise description of what it feels like to have your personal phone number treated as a marketing asset you never authorized.

Legal Receipts: What the Complaint Actually Says

These are direct quotes from the filed court document. No paraphrase. No editorializing. The words are Kalshi’s legal exposure, verbatim.

“no person conducting business in the state may initiate or assist in the transmission of an electronic commercial text message to a Washington resident” unless the recipient has “clearly and affirmatively consented in advance to receive those messages.” RCW §§ 19.190.060-19.190.070.

• This is the law Kalshi is accused of breaking. It doesn’t require intent. It doesn’t require harm beyond the receipt of the text. Sending the message without advance consent is the violation.
• The statute explicitly classifies a violation as “an unfair or deceptive act in trade or commerce” — which triggers Washington’s Consumer Protection Act on top of CEMA, creating two parallel legal exposures from the same conduct.

“Kalshi knows that existing users do not obtain consent because the users are unaware that they are supposed to obtain consent prior to sending the messages (much less clear and affirmative consent to receive commercial text messages). But instead of requiring proof of consent, or prohibiting users from texting referrals without consent, Kalshi directs its customers to send texts to Washington residents, and offers lucrative referral fees for doing so.”

• The complaint is arguing that Kalshi is not merely negligent — it has actual or constructive knowledge that its users don’t know consent is required, and it chose to pay them bonuses to keep sending texts anyway.
• This framing is important for damages purposes: “consciously avoids knowing” is the legal phrase for willful blindness, which can support enhanced penalties.

“Neither the web version nor the app version of Kalshi’s ‘Refer a friend’ program mention consent at all.”

• This is the most structurally damning single line in the complaint. Kalshi built two separate product interfaces — a mobile app and a website — for this referral program. The legal requirement to obtain consent before texting Washington residents appears in zero of them.
• This is not a forgotten checkbox. It is an affirmative design decision to exclude consent from the product flow entirely.

“Kalshi maintains records that show which cell phone numbers have consented to commercial text messages from Kalshi. Thus, Kalshi could check whether a particular Washington cell phone number has — or has not — consented to commercial text messages from Kalshi. But Kalshi does not check whether a recipient has consent before sending the messages. Kalshi could, but does not, block the text messages from being sent to Washington state residents that have not given clear and affirmative consent.”

• Kalshi already has a consent database. The infrastructure to comply with CEMA exists inside the company right now. The complaint’s allegation is that Kalshi looked at the cost of compliance, looked at the revenue from its referral program, and chose the revenue.
• This “could but didn’t” framing is significant: it eliminates the technical impossibility defense and puts the decision squarely in the category of a knowing business choice.

The Agency Chain: How Kalshi Built a Proxy Spam Network

Kalshi’s legal exposure hinges on whether its existing users are acting as its agents when they send referral texts. The complaint argues they are — on multiple legal theories simultaneously.

• Actual agency: Kalshi grants users the right to send referral texts on its behalf, creates the message content and links, and pays users bonuses for completing the task. All three elements of actual agency — authorization, control, and compensation — are alleged to be present.
• Apparent agency: Recipients of the texts reasonably believe they are dealing with Kalshi directly. The message text is written by Kalshi. The link points to Kalshi’s domain. The image in the message is generated by Kalshi’s system. Plaintiff Nicholas Brown states he “reasonably believed” he was dealing with Kalshi and receiving a Kalshi promotion sent on Kalshi’s behalf.
• Ratification: Kalshi promotes its referral program nationwide, tracks which consumers click referral links (including their geographic location), and knows Washington residents are receiving these texts. The complaint argues that continuing to operate and profit from the program constitutes ratification of each individual text sent.
• The result: Kalshi insulates itself from direct transmission by routing messages through its user base, while maintaining full control over message content, link generation, and financial incentives. The complaint is structured specifically to pierce that insulation.

Public Deception: The Gap Between the Product and the Reality

Kalshi’s “Refer a Friend” program presents itself as a simple, friendly way for users to share a product they like — but the complaint documents a systematic gap between what the experience appears to be and what is actually happening under the hood.

• What users were told: The program is a peer-sharing feature where you invite friends. What was hidden: Kalshi composes the message text, generates the link, creates the promotional image, and directs users to send it — the “personal recommendation” is a corporate advertisement delivered through a personal channel.
• What recipients were shown: A text from someone they know, containing what appears to be a personal tip about a trading app. What was hidden: the message was written by Kalshi’s system, the link routes to Kalshi’s servers, and the image was generated by Kalshi’s software — none of which is disclosed in the message.
• What the program interface implies: That clicking “Share link” is a routine, harmless action. What was hidden: Kalshi knew recipients in Washington had not consented, knew its users didn’t understand the consent requirement, and chose not to add any consent mechanism to either the app or website version of the feature.

The Contractor Shield: Using Your Own Customers as a Legal Buffer

Kalshi’s referral architecture follows a pattern that has become standard in the tech industry: use a third party (in this case, your own users) to do the distribution work, then argue you’re not the sender when a legal problem arises. The complaint was written specifically to dismantle that argument.

• The structure: Kalshi does not send the texts directly from its own servers to recipients. Instead, it routes the message through an existing user’s personal phone number. From a pure transmission standpoint, the message comes from someone the recipient knows, not from a short code or corporate number.
• Why the shield is alleged to fail: CEMA prohibits not just “initiating” commercial texts but also “assisting in the transmission” of them. Kalshi is alleged to do both: it initiates the process (generates the content, creates the link, activates the referral program) and it assists (provides the software infrastructure, pays the bonus, directs users to send). The statute was written broadly enough to cover exactly this kind of proxy arrangement.
• The ratification argument: Even if a court found Kalshi hadn’t “initiated” the texts, the complaint argues Kalshi ratified them by tracking which Washington residents clicked the links, knowing Washington-based users would text other Washington residents, and continuing to operate and reward the program after that knowledge was established.
• What the parent extracted: New user accounts in Washington. Revenue from those users’ trading activity. The ability to market its prediction market platform across Washington without paying for conventional advertising channels — all routed through users who were unaware they were acting as Kalshi’s legal agents.

Profit-Maximization at All Costs

The complaint lays out a clear economic logic behind Kalshi’s decision to build its referral program without consent safeguards.

• The program pays existing users a referral bonus when a referred contact signs up for a Kalshi account and meets additional requirements. The bonus can be used for trading on Kalshi — keeping the money inside the platform’s ecosystem.
• Kalshi already has a consent database. The complaint states directly that Kalshi “maintains records that show which cell phone numbers have consented to commercial text messages from Kalshi.” Cross-referencing referral targets against that database before allowing a text to be sent is technically feasible. The complaint alleges Kalshi chose not to build that check into its product.
• The financial incentive to skip consent is explicit: The complaint states 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.” Every new account generated through the referral program is direct revenue. The consent verification step would reduce conversion rates by blocking texts to people who haven’t opted in.
• Statutory damages sought: $500 per class member, with treble damages also sought under the Washington Consumer Protection Act. With tens of thousands of class members estimated by the complaint, total potential exposure runs into the tens of millions before trebling — many multiples of whatever marketing cost savings Kalshi achieved by skipping consent.

Legal Minimalism: Technically a “Friend” Sharing a Link

Kalshi’s referral architecture appears designed to exploit the gap between how spam laws are written and how platform-mediated peer-to-peer messaging actually works.

• CEMA was written to address corporate mass-texting operations sending messages directly from business systems to consumers. Kalshi’s system routes messages through individual users’ personal phones, which on its face looks less like a corporate broadcast and more like a friend sending a recommendation.
• But the statute covers both “initiating” and “assisting” in transmission. The complaint argues this language was designed precisely to capture arrangements where a company does not pull the trigger itself but provides the ammunition, the instructions, and the financial incentive. The referral program fits that structure exactly.
• Washington’s law does not require direct transmission from a corporate server. It requires only that the person “conducting business in the state” initiate or assist in the transmission without consent. By running a business that depends on referral growth, generating all referral content, and paying for each completed referral, Kalshi is alleged to meet every element of “assisting” regardless of which phone the message technically originates from.
• The consent-free program design exploited the ambiguity between “a user chose to text a friend” and “Kalshi directed a user to text a pre-written ad to contacts using Kalshi’s generated link, image, and message text, in exchange for a bonus.” The complaint’s job is to collapse that ambiguity — and the factual record it describes makes the distance between the two framings very short.

Societal Impact Mapping

Public Impact: The Erosion of Personal Communication Channels

When companies route commercial advertising through personal phone-to-phone contacts, the harm isn’t just annoyance. It degrades the reliability of personal communication itself.

• Recipients of referral spam receive a message from a known contact that turns out to be a corporate advertisement. This erodes the signal value of personal texts: every message from a known number now potentially carries undisclosed commercial content planted there by a third-party app.
• The complaint documents that plaintiff Nicholas Brown had no opt-out mechanism at the time he received the text and still has none. He faces ongoing exposure to future referral texts from any contact who uses Kalshi. The harm is not a one-time intrusion — it is a permanent vulnerability created by Kalshi’s system design.
• The estimated class size of “tens of thousands or more” Washington residents means the scale of this intrusion is not limited to one unlucky recipient. It reflects a systematic, state-wide exposure of private phone numbers to unsolicited commercial messaging.

Economic Inequality: Who Pays the Cost of “Free” Referral Marketing

Kalshi’s referral program is, at its core, a mechanism for shifting advertising costs from the corporation to its users and to the recipients of unsolicited messages.

• Kalshi pays its existing users a referral bonus — an award “that can be used for trading on Kalshi.” This means the “compensation” paid to users for doing Kalshi’s marketing work stays inside the Kalshi ecosystem, not as cash in a user’s pocket. The user bears the social cost (sending ads to personal contacts) while Kalshi retains the economic benefit (new paying customers).
• Recipients of the texts bear the full cost of the intrusion: consumed attention, potential data charges, degraded trust in personal communications, and the ongoing risk of future unsolicited texts — with no compensation and no recourse short of joining a class action lawsuit.
• Kalshi, a Delaware corporation headquartered in New York, generates new revenue from Washington residents through a marketing system that the complaint alleges violates Washington state law. The profits flow to the corporation; the externalities flow to Washington residents.

This Is the System Working as Intended

The Kalshi referral program is not a bug in the regulatory system. It is what the regulatory gap between consumer protection law and platform-era technology produces when a company decides to maximize conversion rates.

• CEMA was passed to stop mass commercial texting without consent. But the statute was written before platform companies learned to route their advertising through users’ personal contact lists. The gap between “corporate mass text” and “platform-mediated peer referral” is exactly the space Kalshi’s system occupies — and no enforcement action forced a correction before this lawsuit was filed.
• Kalshi knew its program was reaching Washington residents. The complaint states Kalshi “keeps track of the geographic location of the consumers who click the link and fill out the form, which has included Washington residents.” The data existed. The consent check didn’t. That imbalance reflects a system in which companies optimize for conversion data and externalize legal risk.
• The referral bonus structure is designed to make users feel like participants, not instruments. A user who clicks “Get $10” believes they are benefiting from a voluntary sharing feature. The complaint describes a different reality: that user is functioning as an unpaid sales agent for Kalshi, using their personal relationships as marketing collateral, in a transaction where Kalshi sets the terms, writes the message, generates the link, and collects the new customer.
• The only correction mechanism that has appeared is this lawsuit. Not a regulatory enforcement action by a state agency. Not a platform policy change. A private class action filed by a plaintiff’s law firm. In the current environment, private litigation is the primary check on this category of conduct — and it requires a named plaintiff willing to sue, class counsel willing to take the case, and a federal court docket to process the claim. That is an extraordinarily high barrier for what the statute treats as a per-text violation.

What a Legitimate Fix Looks Like

Editorial analysis. These are recommendations grounded in the specific failures documented in this case, not findings of the source document.

The core structural failure this case exposes: consumer protection statutes designed for direct corporate-to-consumer marketing have not kept pace with platform architectures that route advertising through users’ personal relationships and communication channels.

What Now?

The people accountable for this program are the leadership and product teams at Kalshi Inc. (594 Broadway, Suite 407, New York, NY 10012), a Delaware corporation doing business across Washington State. The class action is active in federal court in Seattle.

Watchlist: Agencies That Should Be Paying Attention

• Washington State Attorney General’s Office — Primary enforcer of CEMA and the Washington Consumer Protection Act. A pattern of violations affecting tens of thousands of Washington residents falls squarely within their mandate.
• Federal Trade Commission (FTC) — Has jurisdiction over unfair or deceptive acts in interstate commerce. Platform-mediated referral spam operating across state lines is within its enforcement purview.
• Commodity Futures Trading Commission (CFTC) — Kalshi operates as a regulated prediction market exchange under CFTC oversight. Consumer protection conduct by a CFTC-regulated entity is relevant to its licensing and compliance standing.

What You Can Do

• If you are a Washington resident who received an unsolicited Kalshi referral text without providing advance consent, you may be a member of the proposed class. Contact plaintiff’s counsel: Maze Law Group PLLC (206-355-6314), Kothari Law (503-567-6735), or Wade, Grunberg & Wilson LLC (404-600-1153).
• File a complaint with the Washington State Attorney General’s Consumer Protection Division at ago.wa.gov. Regulatory enforcement is more likely when complaints accumulate from multiple residents — individual complaints create the paper trail that opens investigations.
• If you currently use Kalshi’s referral program, understand that Washington state law requires clear and affirmative consent from any Washington resident before you send a referral text on Kalshi’s behalf. The complaint argues that by using the program without obtaining that consent, you are functioning as Kalshi’s agent — with Kalshi bearing the legal liability, not you, under the theory advanced here.
• Talk to people in your community about how platform referral programs work. The architecture that routes corporate advertising through your personal contact list is not unique to Kalshi. It is a widespread industry practice. Awareness is the first barrier to normalization.