Share 
New York has filed a lawsuit against Kalshi seeking $36 billion in compensatory damages, arguing the company’s sports-event markets amount to gambling without the licenses and tax obligations required in the state.
Governor Kathy Hochul and Attorney General Letitia James announced the action as part of a broader fight over whether prediction market operators should be treated differently from sportsbooks and other gambling businesses. According to the source report, New York alleges Kalshi’s sports markets meet the legal definition of gambling.
For New York players, the case is another sign that sports prediction markets remain legally unsettled even as they expand. The dispute also matters to the state because regulators and industry groups have argued that operators offering sports-based contracts outside standard gambling rules may avoid licensing costs, consumer safeguards, and taxes.
At the federal level, the NFL is also pressing for tighter oversight. Before the public comment period closed on 27 July, the league told the Commodity Futures Trading Commission that its proposed rules for sports-event contracts fell “significantly short” of protecting sports integrity and consumers.
The NFL called for bans on micro-bets, player props, and award markets. It also urged stronger insider-trading protections, a registry for league-specific prohibited bettors, and a minimum trading age of 21 — a position it shares with the NBA and NCAA.
That debate is becoming more visible in New York. The report noted that the New York Mets recently signed a multi-year commercial partnership with prediction market operator Novig, described as the first partnership between an MLB franchise and a prediction market exchange.
Elsewhere, courts are split on state authority over these products. A federal judge in Minnesota issued a preliminary injunction blocking a state ban set to take effect on 1 August, finding Kalshi and Polymarket showed federal law likely supersedes the state statute for certain event contracts. Two days later, a federal judge in Wisconsin ruled the state could resume enforcing gambling laws against Kalshi and four other firms.
What comes next is less clear. The source report did not provide the full New York court filing or say whether the Minnesota or Wisconsin rulings will be appealed. For now, New York’s case against Kalshi adds more pressure to a fast-moving legal and regulatory fight over where prediction markets end and gambling begins.
—
Source: As reported by igamingbusiness.com.
