New York officials sued prediction market platform Kalshi for potentially billions of dollars on Friday, calling it an "illegal, unlicensed gambling operation" that includes sports wagering as the state seeks to halt its operations and force the company to forfeit its profits. New York joins a growing number of states filing lawsuits against Kalshi and other companies in a dispute with the Trump administration over who regulates the fast-growing prediction market. Kalshi and other platforms argue they are federally licensed and regulated, the AP reports, and states have no authority to govern them.
"It's sad to see this type of political theater from the leadership in our own state," Elisabeth Diana, a spokesperson for New York-based Kalshi, said in a statement. "States can't just shut down a federally licensed exchange. This would also hurt New Yorkers, who would be driven offshore." Prediction market platforms like Kalshi and Polymarket allow trading on the likelihood of a wide range of events such as sports, politics, news, and even the weather. New York Gov. Kathy Hochul and Attorney General Letitia James, both Democrats, announced the lawsuit filed in state Supreme Court in Manhattan.
"New York's gambling laws protect children from underage betting and help combat gambling addiction," James said in a statement. "No matter what they call themselves, prediction markets like Kalshi are gambling platforms." Ignoring the state laws makes them illegal operations, she added. James' office is requesting that Kalshi be ordered to forfeit all illegal gains, pay restitution to consumers who were harmed, and pay fines equal to three times the company's gains. In a court filing, state officials provided a rough estimate of the damages and costs sought by the lawsuit of $36 billion. In April, New York filed a similar lawsuit against prediction market platforms Coinbase and Gemini.
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