\u201cNew York\u2019s gambling laws protect children from underage betting and help combat gambling addiction,\u201d James said in a statement announcing the lawsuit. \u201cNo matter what they call themselves, prediction markets like Kalshi are gambling platforms, plain and simple. 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.\u201d<\/p>\n
With the new lawsuit, New York becomes the latest of several states looking to regulate the emergence of prediction markets, which critics say is no different from gambling. States including Nevada, Massachusetts<\/a> and Washington<\/a> have all won court orders restricting Kalshi\u2019s activity. And earlier this month, a federal judge in New York shot down Kalshi\u2019s bid to block state regulators<\/a> from regulating it.<\/p>\n New York Governor Kathy Hochul said in a statement Kalshi \u201chas chosen to ignore New York\u2019s gaming laws, which exist to protect consumers, prevent problematic gambling, deliver funding for critical public services, and ensure that every company plays by the same rules.\u201d<\/p>\n Kalshi and other prediction markets, like Polymarket, have attempted to distance themselves from traditional gambling by likening their platforms to stock markets and boasting about the informational value of their contracts. These sites offer more traditional betting options like sports, but also allow users to put money down on real-world events like elections and cultural issues.<\/p>\n Past lawsuits from other states have typically targeted the sports contracts, since they serve as a direct alternative to licensed sports betting companies like DraftKings and Fanduel. But in the New York suit, James claims all of Kalshi\u2019s offered contracts are illegal under state gaming laws.<\/p>\n Kalshi, James says, \u201callows bettors in New York and elsewhere, to place bets on the outcomes of future contingent events for which the outcome is uncertain and outside the control of the bettor.\u201d<\/p>\n Beyond sports, James points to Kalshi\u2019s offerings like \u201cWhich party will win the U.S. Senate?\u201d or \u201cBig Brother Season 28 Winner\u201d as examples of unlawful contracts.<\/p>\n \u201cEach contract is a bet,\u201d she says.<\/p>\n James further criticized Kalshi for only requiring users to be 18, while state gaming laws require New Yorkers to be 21 to place wagers. Gambling, James says, can harm \u201ca bettor\u2019s financial, emotional and physical health.\u201d<\/p>\n She\u2019s not just looking to restrict Kalshi\u2019s sports contracts, she\u2019s asking the state court to demand it cease offering \u201ccontracts relating to sports, culture, elections and other events,\u201d since it\u2019s doing so without a gambling license.<\/p>\n Kalshi claims this goes beyond what the federal court allowed.<\/p>\n \u201cIt\u2019s sad to see this type of political theater from the leadership in our own state. States can\u2019t just shut down a federally licensed exchange. This would also hurt New Yorkers, who would be driven offshore. We love New York, we love New Yorkers, and New Yorkers love our product,\u201d said Elisabeth Diana, Kalshi\u2019s head of communications, in a statement.<\/p>\n The Trump administration has proven a thorn in the side of states looking to regulate the new industry. President Donald Trump\u2019s son Donald Trump Jr. is a major investor in Polymarket and sits on the company\u2019s advisory board.<\/p>\n Under the Trump administration, the U.S. Commodity Futures Trading Commission has claimed exclusive oversight of the platforms and sued states looking to rein them in<\/a>.<\/p>\n Kalshi and Polymarket, the two largest prediction markets, have been lightning rods for controversy as they rise in popularity. Numerous insider trading-esque scandals have plagued the platforms, particularly relating to their real-life event contracts.<\/p>\n In April, federal prosecutors in New York charged a master sergeant in the U.S. Army Special Forces with using classified information to bet on the removal of Venezuelan President Nicol\u00e1s Maduro<\/a>. Prosecutors say Gannon Ken Van Dyke, who was explicitly involved in the operation, placed bets on Polymarket in the days leading up to the mission, making more than $400,000.<\/p>\n Our weekly newsletter Closing Arguments offers the latest about ongoing
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