Kalshi has been dealt a setback in New York, where a federal judge has blocked the prediction market’s request for a preliminary injunction against the state.
The Empire State is arguing that the company ought to be subjected to local gaming laws, and that until such a time, its event contracts ought to be suspended.
This latest legal hiccup comes as Kalshi has been seeing a surging volume of trades, estimated at $50 billion in June alone, and bolstered by the FIFA World Cup.
Kalshi Continues Fight in New York, Even Though Setbacks Continue
US District Judge Analisa Torres has agreed with the argument presented by New York, which states that local gambling laws, and not the Commodity Exchange Act, take precedence when regulating local prediction markets.
Kalshi has naturally pushed back against the decision and is currently appealing it. The platform is facing one of its most difficult regulatory and legal fights locally so far, with both the Attorney General Letitia James and Gov. Kathy Hochul openly opposing prediction markets and criticizing them as a roundabout way to offer gambling products.
Both have released a statement in which they welcomed the newest ruling and its implications:
“New York’s gambling laws are designed to protect consumers. Kalshi tried to ignore them. Yesterday, they lost in court. We will continue to hold all gambling platforms accountable to the law, and that includes prediction markets.”
NY’s AG and Governor
This is the latest chapter in the ongoing legal saga in the state that involves the prediction market leader, with Kalshi first targeted by the New York State Gaming Commission in October, leading to a series of proceedings seeking to swat away the watchdog’s claims as to who can regulate prediction markets.
The Commodity Futures Trading Commission (CFTC) has not sat silently in these matters, and has argued that the gaming regulator is trying to preempt its regulatory exclusivity in the matter.
CFTC Chairman Michael S. Selig has been openly critical of New York’s attempts to leverage gambling laws to regulate CFTC-registered exchanges.
“As I’ve said before, the CFTC will not allow overzealous state governments to undermine the agency’s longstanding authority over these markets,” Michael S. Selig said.
While Kalshi’s legal woes are probably not over, its commercial success and growing brand footprint have been a confirmed fact.
A recent survey by YouGov BrandIndex showed that Kalshi is among the companies to gain the most in consumer sentiment over the past weeks, bolstered by resurgent interest for the FIFA World Cup.