New York sued Kalshi on Friday in the Supreme Court for New York County, accusing the prediction-market operator of running an unlicensed gambling business. Attorney General Letitia James wants Kalshi to forfeit its illegal gains, pay restitution to harmed users, and hand over penalties equal to three times what it earned from the contracts. Governor Kathy Hochul joined the announcement.
The complaint’s narrower hook: Kalshi lets 18-to-20-year-olds trade, under the state’s 21-and-up floor for mobile sports betting. James calls that plain and simple gambling.
Kalshi didn’t wait for a hearing date to answer. It leaned on the argument that’s kept this fight alive nationwide: states can’t touch a market the Commodity Futures Trading Commission already regulates. The CFTC agrees, and it’s not new to this courtroom. The agency sued New York in April in the Southern District, seeking an injunction against state enforcement on the same exclusive-jurisdiction theory. Chairman Michael Selig called James’s move an attempt to force “an unprecedented sudden shutdown of prediction markets nationwide.”
This is the same script the CFTC ran against Arizona, Connecticut and Illinois, and the same argument it pressed in May before the Sixth Circuit, backing Kalshi against Ohio on the theory that federal law preempts state gambling statutes for CFTC-registered exchanges. New York just became the biggest state yet to test whether that preemption theory survives a real trial.
James Okafor