New York State Sues Prediction Market Platform Kalshi Over Alleged Illegal Gambling Operations

New York Attorney General Letitia James filed a lawsuit on Friday against the prediction market platform Kalshi, alleging the company is running an illegal gambling operation by failing to register with the New York State Gaming Commission. The administration announced that the state seeks a permanent injunction to halt Kalshi's operations, while also seeking total restitution for users, a $100,000 penalty for each sports wagering attempt, and fines equal to three times the company's gains. Governor Kathy Hochul supported the action, stating that the state's gambling laws are designed to protect children from underage betting and combat gambling addiction. In contrast, Kalshi spokesperson Elisabeth Diana criticized the state's move as "political theater," arguing that the company is a federally licensed exchange. The Commodity Futures Trading Commission, which operates under the Trump administration, maintains exclusive jurisdiction over prediction markets. The lawsuit highlights a growing national conflict between state authorities and the federal government over whether prediction markets are regulated as financial derivatives or as sports betting.

Sources

• CNBC
  New York sues Kalshi, says prediction market is running 'illegal gambling operation'
• The Guardian
  New York sues prediction market platform Kalshi alleging 'illegal gambling operation'
• Times Union
  State suit calls Kalshi prediction markets unlicensed, illegal gambling
• CNN
  New York sues prediction market Kalshi alleging it’s an illegal gambling operation
• CBS News
  New York sues Kalshi, alleging the prediction market enables illegal gambling