WASHINGTON (dpa-AFX) - New York Attorney General Letitia James has sued prediction-market platform Kalshi, alleging the company is operating an illegal, unlicensed gambling business in the state. The lawsuit seeks to stop Kalshi from doing business in New York, recover profits, and impose financial penalties.
The complaint claims Kalshi failed to obtain a required New York gambling license, did not pay required taxes, and allowed users below the state's legal age for mobile sports betting to participate.
State officials argue that prediction markets where users can place wagers on outcomes involving everything from sports and politics to economic events fall under New York's gambling laws.
The case adds to a growing fight over who has authority to regulate prediction markets. Kalshi says it is a federally licensed exchange overseen by the U.S. Commodity Futures Trading Commission (CFTC) and argues that states don't have the power to regulate or shut down its operations.
The lawsuit follows a federal appeals court decision allowing New York's gambling laws to apply while related litigation continues. At the same time, the CFTC has urged a federal judge to block New York's enforcement efforts, warning that state action could interfere with federally regulated prediction markets.
Kalshi has denied the allegations, calling the lawsuit 'political theater,' and says it will continue to defend its position that prediction markets are governed by federal not state oversight.
The company has faced similar challenges in other states as regulators continue to debate whether prediction markets should be treated as financial exchanges or as gambling platforms.
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