On July 31, New York Attorney General Letitia James and Governor Kathy Hochul launched a lawsuit against Kalshi, accusing the prediction market platform of running an unlicensed gambling operation.
The state seeks treble damages up to $36 billion, a sum that could rank among the biggest enforcement actions against a fintech company.
Kalshi allows users to trade contracts on event outcomes like elections and sports matches. New York says this counts as gambling and claims Kalshi lacks the required license from the State Gaming Commission.
The complaint demands a permanent injunction to halt Kalshi's operations in New York, restitution for users, and seizure of what officials call illicit profits. Authorities express concern over risks to consumers, including minors, from unregulated betting.
Kalshi dismissed the case as "political theater" and plans to challenge it federally. The company argues that the Commodity Futures Trading Commission's oversight of its platform preempts state gambling laws.
Founded in 2021, Kalshi recently raised $1 billion in a Series F round, valuing it at $22 billion. It reports annual revenues between $1.5 and $3.5 billion and handles over $178 billion in yearly trading volume.
The platform also supports crypto deposits and offers markets on digital asset prices and perpetual futures. However, the lawsuit focuses solely on gambling violations.
This is an informational piece, not financial advice.
