RESOLVING THE LEDGER
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On Friday, New York state filed a lawsuit against prediction market platform Kalshi, claiming that it's operating as an "unlicensed gambling business."
The Office of Attorney General Letitia James found that Kalshi is an illegal prediction market that exposes New Yorkers to "serious personal and financial risk," according to a press release. The lawsuit seeks fines, the forfeit of all illegal gains, and restitution to members.
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The suit claims that Kalshi's prediction markets meet the legal definition of gambling "because the outcomes of the events on which its users are betting are uncertain and outside the control of the bettor or hinge on a game of chance." But the platform hasn't obtained a license from the New York State Gaming Commission. It also states that Kalshi is available to adults aged 18-20, while New York law requires users to be at least 21 to bet on sports.
"Kalshi has chosen to ignore New York’s gaming laws, which exist to protect consumers, prevent problematic gambling, deliver funding for critical public services, and ensure that every company plays by the same rules," New York Governor Kathy Hochul said in the press release. "This choice has consequences, and working closely with Attorney General James, New York is taking action to stop this illegal behavior and bring Kalshi into compliance, because no company is above the law."
"No matter what they call themselves, prediction markets like Kalshi are gambling platforms, plain and simple. By ignoring our laws, Kalshi is running an illegal operation and harming New Yorkers in the process," James said in the press release. "We are taking them to court to uphold our laws and protect New Yorkers."
Friday's lawsuit comes after New York sued Coinbase and Gemini for similar allegations in April. It also comes after Kalshi sued New York state in Oct., according to CNBC, following New York's Gambling Commission's cease-and-desist letter to the company. A judge denied the company's request for a preliminary injunction and temporary restraining order against the commission in July.
The Commodity Futures Trading Commission (CFTC), an agency of the federal government, has now sued New York , as it considers prediction markets to fall within its jurisdiction. "Rather than seek reasoned answers from the courts, Letitia James and New York seek to force an unprecedented, sudden shutdown of prediction markets nationwide," CFTC chairman Mike Selig posted on X . "The [CFTC] has already sued to stop this and will continue to defend its jurisdiction."
"It's sad to see this type of political theater from the leadership in our own state," a Kalshi spokesperson said in a statement to CNBC. "States can’t just shut down a federally licensed exchange… We love New York, we love New Yorkers, and New Yorkers love our product."
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