State Officials Target Prediction Markets Amid Growing National Clash Over Federal Jurisdiction
The State of New York has filed a lawsuit against prediction market operator Kalshi, accusing the company of operating an illegal gambling business. Announced jointly by New York Governor Kathy Hochul and State Attorney General Letitia James, the lawsuit seeks to force the New York-based platform to forfeit its profits, provide consumer restitution, and pay triple-profit fines.
Regulatory and Legal Battlegrounds
The legal action from New York adds to mounting nationwide pressure on prediction markets. State officials argue that prediction platforms essentially function as sports betting and gambling sites, pointing out that Kalshi permits 18-to-20-year-olds to participate despite New York’s 21-plus mobile sports betting limit. Furthermore, the state contends that unlicensed operations undermine funding for public schools and problem-gaming treatment programs.
Conversely, prediction market operators maintain that they operate like financial stock markets, where consumers trade against one another rather than a traditional “house,” with platforms taking only a trading fee. They rely on federal commodities law, asserting that the CFTC holds exclusive jurisdiction over transactions.
The jurisdictional conflict has triggered numerous legal battles across the U.S., including federal lawsuits involving Arizona, Connecticut, Illinois, and Minnesota, as federal and state authorities clash over the future oversight of prediction exchanges.
