Letitia James Sues Kalshi for Operating an Illegal Gambling Operation in New York
New York Attorney General Letitia James has filed a lawsuit against the prediction market company Kalshi, accusing it of running an illegal gambling operation without proper state licenses. The administration of the state seeks at least $36 billion in financial penalties and a permanent ban on Kalshi's operations until it obtains all required licenses from the state's Gaming Commission. While Kalshi operates as a federally regulated exchange, Letitia James argues that prediction markets are fundamentally gambling platforms. The state aims to make full restitution to customers and collect a penalty of three times the revenue generated by the company. However, the federal government, via the Commodity Futures Trading Commission, argues that federal law preempts state gambling laws for prediction markets. The CFTC has already filed a motion to block New York from pursuing civil or criminal enforcement. The case highlights a growing conflict between state rights and federal oversight regarding how sports-related prediction markets are regulated.