New York Files $36 Billion Lawsuit Against Kalshi

New York Sues Prediction Market Kalshi for $36 Billion

The state’s legal filing asks the court to permanently ban Kalshi from operating within New York unless the company obtains the required licenses from the state’s Gaming Commission. According to court documents, the multi-billion-dollar penalty request includes full restitution for consumers who used the platform, a penalty of three times the amount of revenue generated by Kalshi in New York, and a $100,000 fine for each instance or attempt to offer unlicensed sports wagering in the state.

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No matter what they call themselves, prediction markets like Kalshi are gambling platforms, plain and simple, espn.com. The attorney general argued that Kalshi’s offerings constitute quintessentially gambling and expose New Yorkers—including individuals under the state’s legal sports betting age of 21—to gambling addiction without adequate safeguards.

Regulatory Conflict and Federal Jurisdiction Clash

The high-stakes lawsuit highlights an escalating clash between state regulators and federal oversight. While Kalshi operates as a federally regulated exchange overseen by the Commodity Futures Trading Commission (CFTC), New York officials maintain that state gambling laws override federal permissions regarding sports event contracts.

The CFTC rejects New York’s stance, maintaining that it holds exclusive jurisdiction over commodity derivatives markets, including prediction platforms. In response to New York’s enforcement actions, the federal regulator requested an emergency order to prevent the state attorney general from taking action against CFTC-registered platforms, warning that allowing state enforcement could bring federally regulated markets to the brink of destruction.

Kalshi swiftly moved the lawsuit from state court to a federal court in Manhattan. A Kalshi spokesperson criticized the state’s actions, calling them political theater and stating that States can’t just shut down a federally licensed exchange while adding that the move would ultimately drive New York users to offshore platforms.

Legal Precedents and Ongoing Court Battles

The New York lawsuit follows a series of setbacks for prediction markets in the state. U.S. District Judge Analisa Torres previously denied Kalshi’s request for a preliminary injunction to block New York from enforcing its gambling laws, ruling that the federal Commodity Exchange Act did not supersede state gambling laws as applied to sports-event contracts.

State officials have similarly targeted other platforms, filing lawsuits against Coinbase Financial Markets and Gemini Titan in April over similar event contracts. Across the country, legal battles involving prediction markets have yielded mixed results. Courts in jurisdictions such as New Jersey and Minnesota have granted injunctions protecting prediction markets from state-level enforcement, while other states have seen conflicting rulings or agreements, such as Nevada forcing Kalshi to implement geolocation technology to block local trades.