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Kalshi, the US-based event trading platform, has filed a federal lawsuit against New York, challenging a recent cease-and-desist order that alleges the company is offering sports betting without a state license. The case was lodged in the US District Court for the Southern District of New York and targets the New York State Gaming Commission, as Kalshi seeks to prevent enforcement of the order.
The company argues that its sports prediction markets fall under the federal jurisdiction of the Commodity Futures Trading Commission (CFTC) rather than state gambling regulators. This legal action adds to Kalshi’s growing list of challenges against state authorities and tribal gaming groups across the country as regulators increasingly scrutinize prediction markets.
In the lawsuit, Kalshi emphasizes the stakes involved: “Kalshi has no option but to seek judicial relief. 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.”
State Regulators Push Back on Prediction Markets
New York is at least the eighth state to issue an enforcement order to Kalshi, joining Arizona, Illinois, Maryland, Montana, Nevada, New Jersey, and Ohio. To date, Kalshi has already filed lawsuits in four states: Maryland, Nevada, New Jersey, and Ohio.
Earlier this month, Massachusetts Attorney General Andrea Campbell also filed suit to block Kalshi’s sports event markets. In New Jersey and Nevada, the company has obtained initial injunctions preventing enforcement, while in Maryland, a preliminary injunction request was denied and is currently under appeal. A coalition of 34 state attorneys general has filed a brief supporting New Jersey’s case against the platform.
Several tribal gaming groups, including Wisconsin’s Ho-Chunk Nation and multiple California tribes, have also filed challenges, highlighting the complex intersection between state and tribal gaming regulations. Meanwhile, mainstream trading platforms such as Robinhood and Crypto.com are facing similar scrutiny over event-based prediction products.
In addition to enforcement actions, regulators have issued warnings to licensed sportsbooks. Illinois recently informed operators that prediction market products “constitute gambling under Illinois law” and that participation or facilitation could affect licensure. Similar notices have been sent to sportsbooks in Arizona, Michigan, Nevada, and Ohio. Companies including DraftKings, FanDuel, and Underdog have already begun offering event trading products, prompting closer regulatory attention.
Arkansas AG Issues Opinion on Prediction Markets
Arkansas has also weighed in. The state’s Attorney General recently issued an opinion, prompted by Senator Bryan King, concluding that Kalshi’s products may violate state law. The opinion cited 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.” The statement noted that labeling the products as prediction markets does not exempt them from regulatory scrutiny.
As Kalshi continues its nationwide legal push, the cases are likely to test the boundaries between event trading as financial speculation versus state-defined gambling, with implications for operators, regulators, and consumers across multiple jurisdictions.
Source: iGaming Business
