ALBANY, New York (WWNY) – New York has become the latest state to sue Kalshi, a “prediction market.”
A statement from Attorney General Letitia James’s office shortly after midnight noted “An investigation by the Office of the Attorney General (OAG) found that Kalshi’s prediction market is an illegal, unlicensed gambling operation.”
The lawsuit charges Kalshi “exposes New Yorkers – including those under the legal gambling age of 21 – to serious personal and financial risk.”
Kalshi’s response, as reported by CNN, was a statement: “It’s sad to see this type of political theater from the leadership in our own state. 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.”
Kalshi is one of a new wave of ‘prediction market’ apps. On Kalshi, you can bet not only on sports – it allows online gamblers to place bets on a wide variety of other things ranging from election outcomes to pop culture.
The lawsuit seeks to have a judge “order Kalshi to forfeit all illegal gains, distribute restitution to consumers who were harmed, and pay fines equal to three times the gains the company made through its illegal actions.”
Prediction markets have been hailed as a way to gain insights that traditional polling can’t produce – the idea being that people who are investing their own money will make more informed decisions about what they expect will happen, while critics say Kalshi and other, similar companies are thinly described gambling operations.
As attorneys general from various states around the country sue Kalshi and other prediction markets, they are in conflict with the federal government, which is claiming the exclusive right to regulate the markets.
CNN reporter Kara Scannell writes “Overnight, the federal regulator, the CFTC, asked the judge overseeing the federal case to issue an order to stop New York from taking any action against prediction markets, saying it has exclusive jurisdiction.
“Altogether, allowing New York to enforce its gambling laws against CFTC-regulated (entities) has the potential for a single state to bring entire federally regulated markets to the brink of destruction,” the CFTC wrote in a court filing.”
Kalshi has been in the news most recently with the disclosure that a longtime aide to President Trump – the aide who ran the president’s teleprompter – was using his inside knowledge of what President Trump would say in his speeches to bet on Kalshi.
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