New York state has sued Kalshi, claiming the prediction market company that has exploded in popularity in recent months is running an “illegal gambling operation,” according to Davis Giangiulio of CNBC.com. The suit claims Kalshi “accepts wagers as a gambling business in disregard for the state’s constitution and laws by not being registered with the New York State Gaming Commission.” The state is seeking a “total restitution to users who have placed trades on the platform, a $100,000 penalty for each attempt to offer sports wagering, and another penalty three times the amount the company has gained while allegedly operating in violation of New York law.” Forty-four state attorneys General on Monday sent a letter to the CFTC stating that the commission “has no right to regulate sports-related event contracts, as part of a public comment period for the agency’s first draft of regulations on prediction markets.” The state cited Kalshi’s “sports offering as the reason for its lawsuit,” but it also claims that the company’s “elections, culture and some other event contract offerings also put it in contradiction with the state’s laws” (CNBC.com, 7/31).
ANOTHER BLOW: BLOOMBERG NEWS’ Erik Larson notes the lawsuit is the “latest legal clash for Kalshi” as a New York judge earlier this month ruled that the company “can’t stop state gaming officials from overseeing its sports prediction markets.” Meanwhile, a federal judge “temporarily halted enforcement of Minnesota’s first-in-the-nation law barring prediction markets, finding that some of the contracts could be considered financial instruments under the exclusive jurisdiction of a federal agency” (BLOOMBERG NEWS, 7/31).