Kalshi Sued for Running Illegal Gambling Operation

New York Governor Kathy Hochul and Attorney General Letitia James have filed a lawsuit against the trading platform Kalshi, alleging the company is operating an illegal gambling operation in the state. Authorities found that Kalshi was providing services to individuals under the legal gambling age of 21, putting them at "serious personal and financial risk."

The lawsuit demands Kalshi to cease operations in New York and pay a $100,000 penalty for each attempt, as well as fees three times its gains in the state, potentially costing the company an estimated $36 billion. Hochul stated that Kalshi has ignored New York's gaming laws, which aim to protect consumers, prevent problematic gambling, fund essential public services, and maintain fair regulations.

The lawsuit comes as state regulators contemplate rules for prediction markets, which have gained significant popularity in recent years. Kalshi maintains it is a prediction-based stock exchange, but regulators disagree, calling it a gambling platform. Critics warn of the growing crisis of gambling addiction, with users risking their entire incomes on prediction markets.