New York Sues Kalshi as Legal Pressure on Prediction Markets Intensifies
New York Governor Kathy Hochul and Attorney General Leticia James have filed a lawsuit against Kalshi, a prominent prediction market platform. This action represents a significant escalation in the ongoing dispute over whether event contracts fall under federal commodities law or state gambling regulations.
According to a press release from the New York Attorney General’s office, James and Hochul allege that Kalshi is operating illegal gambling products within the state without the requisite licenses. The complaint, filed in Manhattan state court, seeks to prevent the platform from offering its event contracts to New York residents. It also requests financial penalties, forfeiture of profits, and restitution for affected customers.
The lawsuit describes event contracts as instruments that allow users to trade on the outcomes of various real-world events, including sports matches, elections, and economic data releases. However, New York officials contend that these contracts constitute unlicensed gambling under state law.
Furthermore, the officials argue that Kalshi permits individuals between the ages of 18 and 20 to participate, despite New York State law requiring bettors to be at least 21 years old. Kalshi, however, maintains that its products are federally regulated derivatives overseen by the U.S. Commodity Futures Trading Commission (CFTC), and not gambling products subject to state gaming laws.
The lawsuit from New York comes just weeks after a federal judge denied Kalshi’s request to prevent state officials from enforcing gambling laws while the broader legal case unfolds.
The rapid growth of major prediction market platforms like Kalshi and Polymarket has drawn the attention of regulators, marking the latest development in an increasingly complex jurisdictional dispute over their operations. The CFTC has consistently asserted its authority over federally registered prediction markets, while New York officials argue that event contracts closely resemble traditional betting. The CFTC has previously sued New York, asserting that federal law preempts state attempts to regulate these products.
New York has recently filed similar lawsuits against prediction market businesses operated by Coinbase and Gemini, alleging they offered the same illegal gambling services without proper authorization.
Meanwhile, Kalshi and Polymarket are also facing significant backlash internationally, with bans implemented in jurisdictions such as Argentina, Spain, Brazil, and Indonesia.
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