The state of New York is suing Kalshi for $36 billion and wants to shut down the prediction market for running what it calls an “illegal gambling operation.”
The 32-page lawsuit, filed against Kalshi shortly after midnight Thursday in state Supreme Court in Manhattan, claims the prediction market violates the New York State Constitution and the Federal Interstate Wire Act.
New York is seeking at least $36 billion in compensatory damages. In addition, the state wants Kalshi to repay money to consumers and pay a $100,000 civil penalty for each illegal sports bet provided in New York.
AG: Kalshi is ‘running an illegal operation’
“No matter what they call themselves, prediction markets like Kalshi are gambling platforms, plain and simple,” New York Attorney General Letitia James said in a press release. “By ignoring our laws, Kalshi is running an illegal operation and harming New Yorkers in the process.”
The New York attorney general, Letitia James, claims that the prediction market’s services constituted “quintessentially gambling” and that the prediction market exposed New Yorkers to gambling addiction without sufficient protections.
People aged 18 or older can also use the controversial prediction market, which is another point of contention. New York claims in the lawsuit that it violates state law, which sets a minimum age of 21 to bet on sports.
“New York’s gambling laws protect children from underage betting and help combat gambling addiction,” James said in her statement. “By ignoring our laws, Kalshi is running an illegal operation and harming New Yorkers in the process. We are taking them to court to uphold our laws and protect New Yorkers.”
James asked the court to permanently bar Kalshi from doing business in New York state, where it is currently headquartered, until it receives a gaming license.
Kalshi reacted quickly to the lawsuit
Kalshi swiftly moved the matter from state court to federal court. The federal agency that regulates prediction markets, the Commodities Futures Trading Commission (CFTC), also acted quickly, requesting an emergency order that would prevent the New York Attorney General from taking enforcement action against Kalshi or any other platform registered with the CFTC.
“It’s sad to see this type of political theater from the leadership in our own state,” a Kalshi spokesperson said in a statement. “States can’t just shut down a federally licensed exchange. This would also just hurt New Yorkers, who would be driven offshore. We love New York, we love New Yorkers, and New Yorkers love our product.”