New York sues Kalshi, calling it an 'illegal gambling operation'

New York state officials have filed a lawsuit against prediction market platform Kalshi, labeling its operations as an "illegal, unlicensed gambling operation." The suit, potentially seeking billions of dollars, aims to halt the company's activities and compel it to surrender all profits.

The state alleges that Kalshi's activities violate New York's gambling laws, seeking the forfeiture of all illegally gained profits, restitution for harmed consumers, and fines triple the company's gains. New York Attorney General Letitia James stated that Kalshi is running an illegal operation and harming New Yorkers by disregarding state laws.

Kalshi disputes the allegations, asserting that prediction markets are federally regulated and states lack the authority to govern them. Company spokesperson Elisabeth Diana commented that states cannot shut down federally licensed exchanges and that such actions would drive New Yorkers to offshore platforms.

The lawsuit is part of a growing dispute between states and companies like Kalshi, which offer platforms for trading on the likelihood of various events. While Kalshi and similar platforms argue they operate like stock markets and are subject to federal regulation, New York authorities maintain they meet the definition of gambling and contravene state laws.