New York sued Kalshi, seeking up to $36 billion in penalties
Why it matters: The case could test whether states can police federally regulated prediction markets as gambling.
New York sued prediction-market platform Kalshi in Manhattan state court, arguing the company is running illegal, unlicensed gambling in violation of state law. The lawsuit seeks a permanent injunction, restitution for users, forfeiture of alleged illegal gains and fines that state officials estimate could reach $36 billion. Attorney General Letitia James and Gov. Kathy Hochul cast the case as a consumer-protection effort aimed at underage betting and gambling addiction. Kalshi, which is based in New York City, argues its event contracts are federally regulated derivatives, not sports betting, and says states cannot shut down a federally licensed exchange. The case adds to a widening fight between state gaming regulators and prediction-market platforms.