New York Governor Kathy Hochul and Attorney General Leticia James have filed a lawsuit against one of the most popular prediction market platforms, Kalshi.
The move marks the latest escalation in the growing battle over whether event contracts fall under federal commodities law or state gambling regulations.
Lawsuit Launched
The press release from the New York office informs that James and Hochul have alleged that Kalshi is operating illegal gambling products in the state without the necessary license. Filed in Manhattan state court, the complaint seeks to stop the platform from offering its event contracts to New York residents and requests financial penalties, forfeiture of profits, and restitution for affected customers.
Event contracts, as the lawsuit describes them, allow users to trade on outcomes of sports matches, elections, economic data, and other real-world events. However, they amount to unlicensed gambling under New York law, stated the PR.
Officials also argued that Kalshi permits users between the ages of 18 and 20 to participate, despite the state requiring bettors to be at least 21 years old. The platform, though, still claims that its products are federally regulated derivatives overseen by the US CFTC, not gambling products subject to state gaming laws.
The lawsuit launched by the state of New York comes just weeks after a federal judge denied Kalshi’s request to block officials from enforcing its gambling laws while the broader case proceeds.
The Bigger Fight
The explosive growth of the two major prediction market platforms, Kalshi and Polymarket, has quickly caught the attention of regulators, and this is the latest chapter in an increasingly complex jurisdictional dispute over their capabilities.
The CFTC has repeatedly defended its authority over federally registered prediction markets, but New York officials argue that event contracts resemble traditional betting. The regulator even sued New York, claiming that federal law preempts state attempts to oversee these products.
New York also sued prediction market businesses operated by Coinbase and Gemini recently, arguing that they offered the same illegal gambling services without proper authorization.
Meanwhile, Kalshi and Polymarket continue to face severe backlash outside the US as well, including some bans in jurisdictions like Argentina, Spain, Brazil, and Indonesia.
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