- New York sued prediction market platform Kalshi, alleging it operates an illegal gambling business via event contracts on sports, elections, and other outcomes.
- The lawsuit seeks to stop Kalshi’s operations in the state, forfeit gains, pay restitution, and triple civil penalties.
- The Commodity Futures Trading Commission (CFTC) filed an emergency motion to block New York’s enforcement, citing federal authority over prediction markets.
- Prediction markets face growing regulatory scrutiny while gaining mainstream traction, with blockchain platforms processing $20 billion in World Cup trading.
New York Attorney General Letitia James announced a lawsuit against prediction market platform Kalshi, alleging the company operates an unlicensed gambling business through event contracts on sports, elections, and other outcomes. The lawsuit seeks to stop Kalshi’s alleged illegal gambling operation in the state, require the company to forfeit illegal gains, pay restitution to users, and pay civil penalties equal to three times those gains, according to a statement. James said: “No matter what they call themselves, prediction markets like Kalshi are gambling platforms, plain and simple.”
The lawsuit follows a cease-and-desist order from the New York State Gaming Commission issued in October 2025, prompting Kalshi to sue the regulator in federal court. A judge denied Kalshi’s request for a preliminary injunction in July, and an appeals court later rejected its bid to block enforcement while the appeal proceeds. Consequently, the Commodity Futures Trading Commission (CFTC) filed an emergency motion seeking to block New York’s enforcement efforts, arguing that the state’s actions interfere with the agency’s exclusive authority under the Commodity Exchange Act to regulate designated contract markets like Kalshi. The CFTC has taken similar positions in disputes involving at least nine states.
Meanwhile, prediction markets continue to gain mainstream traction, with blockchain-based platforms processing about $20 billion in trading tied to the 2026 FIFA World Cup, according to analytics firm Chainalysis.
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