Last month, New York State sued Kalshi, a federally regulated financial exchange, for $36 billion, calling it an “illegal gambling operation.”

What got lost in the noise: Kalshi proposed a framework that could have generated nearly $10 billion for essential services, like public schools, affordable housing, and infrastructure, over five years. That’s a lot of money to leave on the table, and it’s a symptom of a bigger misunderstanding. New York isn’t just missing out on tax revenue. It’s missing what prediction markets actually offer.

Prediction markets are a genuine financial innovation challenging legacy industries, and they’re good for business, good for the economy, and good for the people who use them. A prediction market is a financial exchange, not a sportsbook; it’s closer to a stock market for real-world events. It makes money the way Nasdaq does, charging a transaction fee rather than betting against its own customers. That structure gives people a legitimate way to act on real information and manage risk, whether it’s about interest rates, elections, or the weather, not just sports.

On Kalshi, traders can actually come out ahead unlike with sportsbooks where the house always wins and those who do win too often get banned. An exchange succeeds when trading activity grows, not when customers lose money. That’s a better deal for consumers, and it adds up to something bigger for New York: more trading activity, better real-time information for businesses and policymakers, and more jobs behind a growing, well-regulated market.

That structure also comes with real safeguards already built in, from identity verification and anti-money-laundering controls to age verification and real-time trade surveillance, all of it required under federal oversight and enforced across every CFTC-regulated market. 

As a five-term member of Congress and former chair of the U.S. Commodity Futures Trading Commission‘s oversight subcommittee, I know this framework well, and the legal question here is more straightforward than the lawsuit suggests. Congress gave the CFTC, not state gaming commissions, exclusive jurisdiction over financial instruments that trade nationwide rather than local betting slips, and CFTC Chairman Michael Selig made exactly that point last week.

A federal judge in Minnesota reached the same conclusion in July, blocking a state ban on preemption grounds. One consistent set of federal rules, not 50 separate state fights, is what lets this industry actually grow. A recent poll showed both Democrats and Republicans clearly want prediction markets regulated, not banned. Why are New York Democrats using a buzz saw, when a scalpel will do?

In New York, we have seen the consequences of letting politics get in the way of a good business decision. In 2019, the state watched a $3 billion investment and 25,000 jobs walk away when Amazon’s Long Island City headquarters became a political football. Prediction markets are a newer, faster-growing version of the same opportunity: an industry that brings jobs, tax revenue, and innovation with it, if the state is willing to let it operate rather than litigate it out of existence.

Gov. Hochul grew up in Western New York, in a region that knows firsthand what it costs a community when good jobs disappear. She, more than most, should recognize the value of letting a growing industry take root instead of driving it away. Prediction markets don’t ask New York to choose between growth and protection. Both already exist, under the same federal framework that governs every other financial exchange in the country. New York’s lawsuit bets against that future. It’s a bet the state is likely to lose.

Maloney, a former New York congressman, is president and CEO of the Coalition for Prediction Markets.