Attorney General of New York Letitia James has launched a lawsuit against the prediction market platform Kalshi claiming that it is running an unlicensed gambling business in New York.
According to the Attorney General’s office, the investigation shows that the prediction markets of Kalshi meet the legal definition of gambling under the New York law. The lawsuit aims to put an end to the illegal operations of the platform in New York, recover the money made from illegal business activity, compensate the affected consumers, and impose penalties.
The lawsuit points out that Kalshi is offering contracts on uncertain event outcomes without obtaining a permit issued by the New York State Gaming Commission and as a result does not need to follow the licensing and tax requirements for regulated gambling operators.
In addition, the lawsuit also mentions that Kalshi allows its users aged 18 and older to make trades on its platform, whereas New York has the restriction of 21 or older for mobile sports betting.
The lawsuit follows the ruling from July when U.S. District Judge Analisa Torres refused Kalshi’s request to stop New York from enforcing its gambling rules by stating that federal commodities law does not allow the state’s gambling regulations.
Governor Kathy Hochul said Kalshi had chosen to ignore New York’s gaming laws and must face the consequences, while Attorney General James argued that prediction markets are “gambling platforms, plain and simple.” The case adds to the growing legal dispute over whether prediction markets should be regulated under federal commodities law or state gambling legislation.
