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New York officials have sued Kalshi, alleging the prediction market platform is operating as an illegal, unlicensed gambling business in the state.
The lawsuit, filed in state Supreme Court in Manhattan and announced by Gov. Kathy Hochul and Attorney General Letitia James, seeks to stop Kalshi’s operations and force the company to forfeit profits. James’ office is also seeking restitution for harmed consumers and fines equal to three times the company’s gains. State officials estimated the damages and costs sought at $36 billion.
New York argues Kalshi offered what amounts to sports wagering without obtaining a license from the state Gaming Commission. The suit also alleges the company avoided obligations that apply to licensed casinos and mobile sports betting operators, including taxes, and says Kalshi allowed users ages 18 to 20 even though New York requires mobile sports betting users to be at least 21.
In a statement announcing the case, James said New York’s gambling laws protect children from underage betting and help address gambling addiction. She added that “prediction markets like Kalshi are gambling platforms, plain and simple.”
Kalshi disputes that characterization. Spokesperson Elisabeth Diana called the lawsuit “political theater” and said states cannot shut down a federally licensed exchange. Kalshi and other prediction market platforms have argued that they are regulated at the federal level and that the U.S. Commodity Futures Trading Commission has exclusive jurisdiction over their event contracts.
The case is the latest step in a broader fight over whether prediction markets should be treated as gambling products under state law or as federally regulated financial products. Last October, the New York Gaming Commission ordered Kalshi to stop what it described as an unlicensed mobile sports wagering operation in the state. Kalshi later sued the commission in federal court, and that case is still pending.
The wider legal battle is also playing out in other states. A federal judge recently blocked Minnesota’s law banning prediction markets, and another federal judge in April temporarily halted Arizona’s efforts to enforce gambling laws against such platforms.
For players, the immediate takeaway is that the legal status of Kalshi-style markets remains contested state by state, even as operators argue they are federally regulated. The next key development to watch is how New York’s new lawsuit interacts with Kalshi’s pending federal case against the state Gaming Commission.
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Source: As reported by DAVE COLLINS.
