New York sues prediction market Kalshi alleging it’s an illegal gambling operation

Key Points:

• New York Attorney General Letitia James has filed a lawsuit against prediction market Kalshi, alleging it operates an illegal gambling business without a state license and has allowed underage users to participate.
• The lawsuit seeks to halt Kalshi’s operations in New York, impose fines, restitution, and require forfeiture of profits, citing protections against underage betting and gambling addiction.
• Kalshi disputes the lawsuit, arguing it is a federally licensed exchange regulated by the Commodity Futures Trading Commission (CFTC) and warns that shutting it down would drive New Yorkers to offshore platforms.
• The case highlights a broader conflict between state gambling regulators and the federal CFTC over jurisdiction of prediction markets, with several states filing similar lawsuits and courts issuing mixed rulings.
• The CFTC has intervened, requesting a federal judge to block New York’s enforcement actions, emphasizing that state interference could threaten federally regulated markets.