Kalshi Suing New York State Gaming Commission As Prediction Markets Continue To Expand
Prediction markets and the New York State Gaming Commission (NYSGC) are headed for a legal fight to determine the legality of the online betting platform in the state.
The NYSGC sent a cease-and-desist letter to prediction market operator, Kalshi, last Friday for what it labeled as “unlicensed sports wagering in New York State.”
Monday, Kalshi filed a lawsuit against the NYSGC in response. The court documents detail Kalshi’s belief that New York’s attempt to regulate it, “intrudes on the federal regulatory framework that Congress established for regulating derivatives on designated exchanges.”
Online casinos aren’t legal in New York, but online sports betting is and it’s regulated by the NYSGC. The commission believes that prediction markets like Kalshi operate outside of those regulation boundaries, while Kalshi and other prediction market operators believe they operate within the law.
Kalshi Fighting for Prediction Market Operators
The action from Kalshi is important for prediction markets as Kalshi has become the recognizable operator in the industry. Any legal decisions that impact Kalshi will likely trickle down to other operators like Robinhood, or the prediction market operator Novig.
Kalshi is taking similar action in New York to what it did in Ohio. The company also has a lawsuit against the Ohio Casino Control Commission and the state Attorney General following a cease-and-desist being issued in Ohio.
The company noted that federal courts in New Jersey and Nevada granted Kalshi preliminary injunctions due to similar state overreach.
Kalshi is now seeking an emergency temporary restraining order and preliminary injunction against the NYSGC to continue operation and avoid “immediate and irreparable harm.”
The NYSGC continues to argue that platforms like Kalshi are offering sports wagering in the state without holding a license.
Should Kalshi continue to get legal victories, it would pave the way for these other prediction markets to operate in the state.
FanDuel, DraftKings Moving Into Prediction Industry
It’s clear that prediction markets have made a big splash around the US.
Not only are we seeing companies like Kalshi, Robinhood, and Novig continue to grow, but now top NJ online casino operators are getting into the act.
This past August, FanDuel announced it was partnering with CME Group to provide event trading contracts. Earlier this month, the two announced the contracts will be micro-betting options, with contracts available for just one hour.
Just last week, DraftKings announced the acquisition of Railbird Technologies Inc. as part of a broader strategy to enter prediction markets.
These moves indicate that regulated online gambling operators see a big future for prediction markets.
Kalshi claims to be legally operating in all 50 US states, that would include many that don’t offer legalized online sports betting or online casinos. Just eight states have taken any kind of legal action against the product, including the recent moves in New York.
FanDuel and DraftKings see prediction markets as a way to reach new customers in states where they currently aren’t legally allowed to operate their sportsbooks or casinos.
Drew Ellis has experience covering the gambling industries in North America and around the world. Decades of media experience provide him with the background to handle the complexities of different gambling laws and policies around the United States and North America. Ellis has primarily focused on online and retail casino news since 2021. Prior to working in the gambling industry, Ellis spent over 20 years in the newspaper industry, covering sports and the gambling. His work for The Mt. Pleasant Morning Sun and The Oakland Press was recognized with awards by the Associated Press and other media organizations. Drew has also contributed to the Detroit Free Press and the Associated Press.
