Kalshi Sues New York Gambling Regulator Over Alleged Unlawful Interference

The U.S. prediction market platform Kalshi has filed a lawsuit against the New York State Gaming Commission, accusing the agency of exceeding its authority and interfering with activities regulated at the federal level, Bloomberg reports.

According to the complaint filed in the U.S. District Court for the Southern District of New York, Kalshi argues that its operations within the state fully comply with federal law. The company claims that the commission’s representatives threatened it with sanctions and asked the court to immediately prohibit the state from taking any enforcement actions against it.

“Defendants have indirectly threatened Kalshi with criminal prosecution and directly with fines unless it ceases operations in New York,” the lawsuit states.

Kalshi maintains that it is subject to federal oversight by the U.S. Commodity Futures Trading Commission (CFTC), as its products are structured as event-based futures contracts. “One of Congress’s goals in creating the CFTC was to prevent the ‘chaos’ that would result from the application of conflicting laws across 51 jurisdictions (50 states and the District of Columbia),” the filing notes.

The company also cited prior federal court rulings in states including Nevada and New Jersey, which sided with prediction platforms and barred local regulators from interfering in their activities.

In response, the New York State Gaming Commission said it considers Kalshi’s operations to be in violation of state law. In a statement to Bloomberg, the regulator referred to a letter sent to the company on October 24, ordering it to cease operations and alleging that Kalshi was running unlicensed sports betting in the state.

Meanwhile, interest in the prediction market sector is growing among U.S. bookmakers. Recently, DraftKings announced the acquisition of the prediction platform Railbird.