New York Files Lawsuit Against Kalshi Over Prediction Markets

An epic showdown is being set up in the Empire State.

New York Attorney General Letitia James filed a lawsuit against Kalshi today. In it, she accuses the operator of operating an illegal gambling operation in the state. She is asking the court to enforce heavy penalties, including a fine of at least $36 billion.

“New York’s gambling laws protect children from underage betting and help combat gambling addiction,” James shared in a statement. “No matter what they call themselves, prediction markets like Kalshi are gambling platforms, plain and simple. By ignoring our laws, Kalshi is running an illegal operation and harming New Yorkers in the process. We are taking them to court to uphold our laws and protect New Yorkers.”

In addition to violating the state’s licensing and tax requirements for gambling operators, Kalshi also set its minimum age at 18. This is lower than New York’s minimum of 21, meaning the prediction market giant was allowing underage betting.

The news continues a rough week for Kalshi in the courtroom. On Monday, it agreed to fully geofence Nevada to comply with a court order. Two days later, a judge ruled that Wisconsin had the right to enforce its gambling laws on the prediction industry. 

Now, the operator will go toe-to-toe with the largest gambling market in the US.

CFTC Files Lawsuit Against New York

Yesterday, the Commodity Futures Trading Commission, which regulates prediction markets, filed a lawsuit against New York. It knew the state’s lawsuit was coming and hoped to get a jump on it by asking the court for a temporary injunction. 

In the filing, the CFTC once again asserted that it has sole authority to regulate prediction markets. It also made it clear that allowing New York to enforce its gambling laws would do irreversible damage to the industry, which continues to rise in popularity. 

Unfortunately for the regulator, a judge rejected the request earlier today.

The CFTC has been active in its effort to protect prediction markets from being labeled as gambling, but has seen mixed results. New York will present its largest test yet.