It's A Gambling Platform "Plain And Simple"; New York Sues Kalshi

Authored by Olivier Acuna via CoinDesk.com,

New York sued prediction-market Kalshi, alleging it offers sports and event wagers in the state without a gaming license.

The petition, filed in the New York Supreme Court on Friday, asks a judge to bar the company from operating an unlicensed gambling business and seeks an accounting of customer bets, losses and company gains, plus restitution, damages and civil penalties.

The state is seeking a penalty equal to three times Kalshi’s gains from the activity, plus $100,000 for each unauthorized or attempted offer of sports or mobile sports wagering, according to a statement published by Governor Kathy Hochul and Attorney General Letitia James.

“New York’s gambling ⁠laws protect children from underage betting and help combat gambling addiction,” James said in the statement.

"No matter what they call themselves, prediction markets like ​Kalshi are gambling platforms, plain and simple."

Kalshi, which targeted a $40 billion valuation during a June funding round, and the prediction markets sector are facing legal challenges across the U.S. In Minnesota, Kalshi and rival Polymarket scored a temporary win when the U.S. District Court for the District of Minnesota ruled the state’s law banning prediction markets likely runs afoul of the Commodity Exchange Act, and granted a preliminary injunction against the law to the two companies and the Commodity Futures Trading Commission.

“It's sad to see this type of political theater from the leadership in our own state,” Elisabeth Diana, Kalshi’s head of communications, said in an email to CoinDesk.

“States can’t 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."

James’ office described Kalshi’s event contracts as bets and said the platform takes wagers on professional and college sports, elections and culture.

The lawsuit alleges Kalshi allows users aged 18 to 20 to wager and lists markets involving New York college teams, both prohibited for licensed sportsbooks in the state.

The World Cup helped boost Kalshi's numbers, adding 3 million during the course of the tournament, according to CNBC. That's more than double the 2 million the firm said it had at the start of May.

According to the attorney general’s statement, the lawsuit follows an October cease-and-desist order from the New York State Gaming Commission.

A federal judge denied Kalshi’s bid to block state regulators on July 7 and rejected an injunction pending appeal on July 27.