Key Moments:
- Kalshi has filed a federal lawsuit against New York to challenge a cease-and-desist order on its sports prediction markets.
- Regulators in at least eight states have issued enforcement orders targeting Kalshi’s event trading operations.
- Legal actions and regulatory opinions across multiple states highlight intensifying scrutiny of prediction markets and their classification as gambling.
Legal Clash Between Kalshi and New York
Kalshi, a US-based event trading platform, has brought a federal lawsuit against New York following a cease-and-desist order that accused the company of offering sports betting without proper state authorization. The legal complaint was filed in the US District Court for the Southern District of New York, naming the New York State Gaming Commission as a defendant. Through this action, Kalshi aims to halt enforcement efforts by state regulators.
🇺🇸 NEW: Kalshi sues New York's gambling regulator, claiming the state is overstepping its authority by issuing a cease and desist order against the predictions platform. pic.twitter.com/5D5XEvBTqp
— Cointelegraph (@Cointelegraph) October 28, 2025
The company contends that its sports prediction markets should be regulated at the federal level by the Commodity Futures Trading Commission (CFTC), not by individual states. This dispute marks the latest in a series of legal confrontations between Kalshi and various regulatory entities, as state scrutiny of prediction markets intensifies nationwide.
In its legal filing, Kalshi stated: “Kalshi has no option but to seek judicial relief. Kalshi has no other practical choice to protect its commercial interests and those of its users except to bring this suit. Absent judicial relief, Kalshi faces the prospect of criminal enforcement and civil penalties in New York as of the date of this filing.”
Regulatory Actions Across the United States
New York is not alone in its stance; it is at least the eighth state to issue such an order to Kalshi, joining Arizona, Illinois, Maryland, Montana, Nevada, New Jersey, and Ohio. Kalshi has responded by filing lawsuits in Maryland, Nevada, New Jersey, and Ohio. Meanwhile, Massachusetts Attorney General Andrea Campbell recently sued to block Kalshi’s sports event markets as well.
Court outcomes have varied: initial injunctions have been granted to Kalshi in New Jersey and Nevada, allowing temporary relief from enforcement. In Maryland, however, a preliminary injunction was denied, with the company currently pursuing an appeal. In addition, a group of 34 state attorneys general has submitted a legal brief in support of New Jersey’s enforcement action against Kalshi.
The table below summarizes state enforcement actions and Kalshi’s legal responses where specified:
| State | Enforcement Order | Kalshi Lawsuit | Current Court Status |
|---|---|---|---|
| New York | Yes | Yes | Lawsuit filed |
| Maryland | Yes | Yes | Preliminary injunction denied; on appeal |
| Nevada | Yes | Yes | Initial injunction granted |
| New Jersey | Yes | Yes | Initial injunction granted |
| Ohio | Yes | Yes | Not specified |
| Arizona | Yes | No | Not specified |
| Illinois | Yes | No | Not specified |
| Montana | Yes | No | Not specified |
Growing Regulatory and Tribal Opposition
Multiple tribal gaming organizations, including the Ho-Chunk Nation of Wisconsin and several California tribes, have initiated their own challenges, reflecting the complex overlap between state and tribal oversight. Additionally, major trading firms such as Robinhood and Crypto.com are under regulatory review for offering event-based prediction products.
Implications for Sportsbooks and Operators
State regulators have also issued formal warnings to licensed sportsbooks. For instance, authorities in Illinois notified operators that “prediction market products constitute gambling under Illinois law” and warned that involvement with such products could influence their licensing. States including Arizona, Michigan, Nevada, and Ohio have distributed similar advisories. The expansion of event trading offerings by companies such as DraftKings, FanDuel, and Underdog has heightened regulatory focus on this sector.
Recent Arkansas Attorney General Opinion
Arkansas has joined the conversation, with the state’s Attorney General recently providing an opinion, after a request from Senator Bryan King, concluding that Kalshi’s offerings could run afoul of state law. The opinion referenced the Arkansas Supreme Court’s definition of gambling: “the risking of money, between two or more persons, on a contest or chance of any kind, where one must be a loser and the other a gainer.” The opinion emphasized that the use of the term “prediction markets” does not shield such activities from regulatory oversight.
Looking Ahead
As Kalshi presses forward with its legal campaigns, these disputes are set to shape the evolving landscape between financial event speculation and definitions of gambling under state laws. The outcomes could have meaningful consequences for operators, regulators, and market participants across the United States.
- Author
Daniel Williams
