New York sues Kalshi, says prediction market is running “illegal gambling operation”

It dramatically escalates New York's battle with Kalshi. Not only accusing the prediction platform of operating illegal gambling on sports, elections and other cultural events, but also seeking to stop Kalshi operating in the state and recover the company's gains. They say with that and fees, it could be as much as $36 billion, penalties of as much as $100,000 per sports event contract. Kalshi's immediate move was to remove the case from state court in Manhattan to federal court, asking that it be linked to Kalshi's existing lawsuit against New York gaming regulators. Now, earlier this month, a federal judge in New York rejected Kalshi's request to block the state from enforcing its own gambling laws, the federal commodities law does not automatically preempt state gambling regulations. Kalshi has appealed that. In this case today, Kalshi has sent me a statement basically calling it "political theater" and saying that the state has killed it to please casinos. But other states are also waging fierce battles. Massachusetts and Washington have won preliminary injunctions against Kalshi in state court. Michigan secured a temporary restraining order. In federal court, Maryland defeated Kalshi's attempts to stop state enforcement, and Nevada has a full ban on Kalshi and just keeps winning in court. Kalshi, however, has won important federal rulings in New Jersey and in Minnesota, so that leaves courts sharply divided. Kalshi, of course, has a commercial relationship with CNBC, including minority investment and customer acquisition. The federal regulator, in this case, the Commodity Futures Trading Commission, CFTC, is entering the legal fray. This is notable. It is suing states, saying they're trying to usurp federal authority. So effectively, you have a federal regulator fighting on behalf of the company that it's regulating. The American Gaming Association, by the way, has also just sent me a statement pointing out that they think $1.2 billion in tax revenues, guys, has been stripped by the entrance of prediction markets on the national scene.