- On October 24, New York's gaming commission ordered Kalshi to shut shop.
- Kalshi says the CFTC, not state authorities, regulates it.
- New York joins a list of states aiming at the prediction market.
Kalshi is sparring with yet another state regulator over its sports betting business.
On Monday, the popular prediction market filed a lawsuit against the New York Gaming Commission, which regulates gambling activity in the state.
That’s because the agency ordered Kalshi to shutter its operations on October 24, alleging that it was operating in the state without a license.
“The Commission demands that Kalshi cease and desist immediately from illegally operating, advertising, promoting, administering, managing, or otherwise making available sports wagering and/or a mobile sports wagering platform in New York,” the order seen by DL News read.
Now, Kalshi, which has already faced at least seven cease-and-desist orders from other state regulators this year, is arguing the commission has no authority to regulate “derivatives trading on exchanges overseen by the Commodity Futures Trading Commission.”
In other words: Not your turf.
$1.3 billion
Founded in 2018, the Kalshi platform lets users bet on the outcomes of any number of events, from sports scores and US monetary policy to who will be the most-searched person on Google this year.
Kalshi and its nearest competitor, Polymarket, saw their volumes soar in the run-up to the 2024 US Presidential election.
These days, sports markets make up the bulk of both platforms’ activities. As of October 20, Kalshi and Polymarket had more than $1.3 billion in sports betting notional volume.
The prediction market boom has also turned state gaming regulators, like those in New York, to take a closer look at Kalshi.
Polymarket isn’t available in the US, but the company has hinted at an imminent launch date.
Blue Lake Rancheria
Gambling authorities in New Jersey, Nevada, Maryland, Illinois, Arizona, Montana, and Ohio have all engaged in legal disputes with Kalshi this year.
In California, the Blue Lake Rancheria, Picayune Rancheria of the Chukchansi Indians, and Chicken Ranch Rancheria of Me-Wuk Indians filed a lawsuit against Kalshi and Robinhood for offering sports event contracts on tribal lands.
In some states, such as New Jersey and Nevada, Kalshi has managed to block enforcement after filing a lawsuit against those authorities.
The company’s legal team argues that, as a designated contract market under the CFTC, Kalshi is subject to the agency’s regulation, not state authorities.
Ultimately, if Kalshi loses out, they’d be faced with landing costly approval on a state-by-state basis and hamstringing growth.
Liam Kelly is DL News’ Berlin-based DeFi correspondent. Have a tip? Get in touch at liam@dlnews.com.
