The lawsuit escalates a growing conflict between prediction market platforms and state gambling regulators regarding jurisdictional authority over these products.
Operators of prediction markets contend their event contracts constitute financial instruments subject to federal oversight by the Commodity Futures Trading Commission (CFTC). Conversely, several states maintain that these contracts function as wagers—particularly those tied to sporting events—and therefore fall under state gambling statutes.
New York has emerged as a primary battleground in this dispute. In July, the state filed suit against Kalshi after negotiations with Governor Kathy Hochul’s office collapsed, seeking penalties and disgorgement potentially exceeding $36 billion. Numerous related cases have advanced to appellate courts, with a recent dispute between Kalshi and New Jersey now pending before the U.S. Supreme Court.
“Our gambling laws exist to protect New Yorkers, prevent the potential harms of problem gambling, and ensure funding for educational and public benefit programs,” Attorney General Letitia James stated.
The legal action arrives less than a year after Polymarket re-entered the U.S. market.
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