Prediction Platform Kalshi Sues New York Regulator, Jurisdiction May Decide the Fate of the Business Model

On October 27, the U.S. prediction marketplace platform Kalshi filed a lawsuit in federal court, officially challenging the regulatory decision made by the New York State Gaming Commission.

The lawsuit stems from the commission’s cease and desist order issued to Kalshi on October 24, accusing its sports event prediction futures of constituting unlicensed gambling activities, and threatening civil and criminal penalties.

In the complaint, Kalshi states that the actions of the New York regulator left it with no choice but to file suit. The company emphasizes that the New York decision not only causes direct and irreparable harm to its platform operations but also severely impacts the interests of users and business partners.

Currently, the core dispute in this lawsuit revolves around regulatory jurisdiction. Kalshi insists that its marketplace should be regulated by the Commodity Futures Trading Commission (CFTC), not by state gambling laws.

Legal expert Daniel Wallach analyzed that since the New York State Constitution explicitly prohibits sports betting (unless authorized by licensed casinos), if the lawsuit is filed within the state court system, Kalshi is likely to face an “automatic failure” scenario.

Kalshi argues that under the Commodity Exchange Act and its 1974 amendments, the CFTC has comprehensive jurisdiction over regulated exchanges. The company emphasizes that Congress intentionally removed provisions allowing states to intervene in futures regulation, and New York’s attempt to classify sports event futures as gambling essentially infringes on a domain prioritized by Congress.

Kalshi’s lawsuit is seen as a critical test for the prediction marketplace industry. If the federal court supports its claim, it will affirm the CFTC’s exclusive regulatory authority over event futures and limit state interference; if it loses, it could trigger a coordinated crackdown on prediction platforms across states, potentially reshaping the industry landscape.

Currently, Kalshi has applied for a federal court to issue a temporary restraining order to prevent New York from enforcing the cease and desist order. The case is expected to focus on two main issues: “federal regulatory supremacy” and the “scope of state sports betting laws.” Regardless of the outcome, this case will provide an important precedent for U.S. fintech regulation and influence the future compliance pathways for similar platforms.

#Kalshi诉讼 # Prediction Market Regulation