New York Challenges Kalshi Over Gambling Laws
New York state has filed a lawsuit against prediction market platform Kalshi, alleging that the company operates an unlicensed gambling business and exposes residents to financial and personal risks. The action, announced by Attorney General Letitia James and Governor Kathy Hochul, seeks civil penalties, restitution for users, and the forfeiture of gains the state considers unlawful.
The complaint argues that Kalshi’s event-based contracts qualify as gambling under New York law because users stake money on uncertain outcomes beyond their control or on events involving chance. State officials also say Kalshi lacks a license from the New York State Gaming Commission and permits participation by people ages 18 to 20, despite the state’s minimum age of 21 for sports betting.
Hochul said New York’s gaming laws are intended to protect consumers, address problem gambling, support public services, and ensure consistent regulation. James similarly maintained that prediction markets are gambling platforms regardless of how they describe their products.
The dispute is part of a broader conflict over whether prediction markets should be regulated by states as gambling or by federal authorities as derivatives exchanges. The Commodity Futures Trading Commission has sued New York, asserting that such markets fall within federal jurisdiction. CFTC Chairman Mike Selig accused the state of seeking an abrupt nationwide shutdown and said the agency would defend its authority.
Kalshi rejected New York’s position, calling the case political theater and arguing that states cannot close a federally licensed exchange. The company has also pursued its own legal challenge after receiving a cease-and-desist order. A judge previously denied Kalshi’s request for preliminary relief against the commission.
The lawsuit follows similar state actions involving Coinbase and Gemini. Together, the cases highlight unresolved questions about overlapping state and federal authority in the rapidly expanding prediction-market industry.