New York sues Kalshi, claiming its unlicensed gambling

New York has filed a lawsuit against Kalshi, a prediction market platform, alleging it is conducting illegal gambling operations. The Attorney General, Letitia James, contends that Kalshi exposes New Yorkers to significant personal and financial risks by providing unlicensed prediction markets. The lawsuit demands penalties, the surrender of all illicit earnings, and compensation to users.

Kalshi's prediction markets are deemed gambling as their outcomes are uncertain and reliant on chance, according to the legal definition. The platform lacks a license from the New York State Gaming Commission, which requires users to be at least 21 for sports betting. New York Governor Kathy Hochul expressed disappointment in Kalshi's disregard of state gaming laws, which aim to protect consumers, deter problematic gambling, generate funding for public services, and ensure fair play for all.

James emphasized that Kalshi's actions are unlawful and detrimental to New Yorkers, and vowed to take the company to court to enforce the regulations and safeguard residents. This legal action follows a similar lawsuit filed by New York against Coinbase and Gemini in April. Additionally, Kalshi had previously sued New York in October, after receiving a cease-and-desist letter from the state's Gambling Commission.

The Commodity Futures Trading Commission (CFTC), a federal agency, has also initiated legal proceedings against New York, arguing that prediction markets are within its purview. The CFTC chairman, Mike Selig, criticized the state's approach, stating that it seeks to abruptly shut down prediction markets nationwide, rather than seeking judicial resolutions.

Kalshi responded by accusing New York of attempting to "shut down a federally licensed exchange," insisting that states cannot simply dismantle federally licensed platforms.