Kalshi added New York to its growing list of lawsuits Monday as it pushes to offer sports prediction markets nationwide.
The company filed the suit in US District Court for the Southern District of New York, targeting the New York State Gaming Commission. Kalshi seeks to block the state from enforcing a cease-and-desist order issued last week, which accused the firm of offering sports betting without a state licence.
Kalshi argues its sports event markets fall under federal oversight by the Commodity Futures Trading Commission (CFTC), not state gambling regulators. The New York case adds to a slate of legal battles for Kalshi against state regulators and tribes.
“Kalshi has no option but to seek judicial relief,” the lawsuit reads. “Kalshi has no other practical choice to protect its commercial interests and those of its users except to bring this suit. Absent judicial relief, Kalshi faces the prospect of criminal enforcement and civil penalties in New York as of the date of this filing.”
States push back against prediction markets
New York’s cease-and-desist letter to Kalshi is at least the eighth known order from a state regulator. The other states are:
- Arizona
- Illinois
- Maryland
- Montana
- Nevada
- New Jersey
- Ohio
Kalshi filed lawsuits against four other states:
- Maryland
- Nevada
- New Jersey
- Ohio
Last month, Massachusetts Attorney General Andrea Campbell filed a lawsuit against Kalshi in an effort to stop sports event markets.
In New Jersey and Nevada, Kalshi received initial injunctions to prevent regulatory enforcement. In Maryland, a judge denied Kalshi’s request for a preliminary injunction. Those cases are under appeal. A coalition of 34 state attorneys general filed a brief in support of New Jersey’s legal case against Kalshi.
Several tribal gaming groups, including Wisconsin’s Ho-Chunk Nation and multiple California tribes, also challenged Kalshi in court. Meanwhile, trading platforms like Robinhood and Crypto.com face similar scrutiny over event-based prediction products.
Warnings to sportsbooks on prediction markets
Last week, Illinois became the fifth known regulator to issue a warning to licensed sportsbooks against offering prediction market products. The letter said prediction markets “constitute gambling under Illinois law” and participating or facilitating such products in Illinois, or another state, might “impact that ‘party’s suitability for licensure.”
Regulators sent similar letters in:
- Arizona
- Michigan
- Nevada
- Ohio
Those warnings come as operators including DraftKings, FanDuel and Underdog have taken steps to begin offering event trading products.
Arkansas AG weighs in on event contract issue
The Arkansas Attorney General’s Office issued an opinion last week stating that Kalshi’s prediction markets violate state law. Senator Bryan King requested an opinion on prediction markets and event contracts, particularly those from Kalshi.
The attorney general’s opinion said Kalshi’s platform allows users to “bet on future events”, based on the Arkansas Supreme Court’s definition of gambling as “the risking of money, between two or more persons, on a contest or chance of any kind, where one must be a loser and the other a gainer”.
It also notes Kalshi calls the products prediction markets, but that “does not protect it from scrutiny”.
The case adds to a growing list of state challenges, as regulators nationwide issue warnings, tribal groups file suits and lawmakers question whether event trading is gambling or financial speculation.