The trading platform Kalshi has sued the New York State Gaming Commission, accusing it of exceeding its jurisdiction by issuing a cease-and-desist order for allegedly providing sports betting illegally in the state.
Kalshi filed a complaint in Manhattan federal court on Monday, claiming that the state regulator has no authority over the platform because it operates as a compliant exchange under the Commodity Futures Trading Commission (CFTC).
The company alleges that the New York regulator threatened to impose "immediate civil penalties and fines" for its offering of sports event contracts. It is seeking both temporary and permanent injunctions from the court, as well as a declaration that the state lacks constitutional authority to regulate it.
Platforms like Kalshi and its blockchain-based competitor Polymarket have become one of the hottest use cases for cryptocurrency this year, allowing users to bet on the outcomes of events in sports, politics, and business.
This lawsuit is the latest legal offensive by Kalshi against regulators, as the platform has also sued gaming regulators in Nevada, New Jersey, Maryland, and Ohio over similar issues, and is defending itself against accusations of violating sports betting laws in Massachusetts.
The New York State Gaming Commission stated in a cease-and-desist order issued on Friday that Kalshi is providing a sports betting platform in New York without a license.
The commission has demanded that Kalshi "cease operating, advertising, promoting, managing, or otherwise providing an unlicensed mobile sports betting platform related to any sporting event in New York State."
Kalshi argued on Monday that the state regulator's order "violates the federal regulatory framework established by Congress for the regulation of designated contract markets."
The company claims it is "exclusively under CFTC jurisdiction," and that New York's "efforts to regulate Kalshi are both preempted by the field and conflicted."
The platform contends that New York's actions "threaten to cause immediate and irreparable harm," stating that shutting down its event contracts in the state "would threaten Kalshi's viability and require the design of complex technical solutions, the feasibility of which is entirely untested and unclear."
Kalshi noted in its complaint that it has obtained preliminary injunctions in federal courts in Nevada and New Jersey, claiming this has prevented "similar state overreach."
A federal judge in Nevada stated in April that if the court did not stop the state gaming regulator, Kalshi would likely suffer harm, while a federal judge in New Jersey reached a similar conclusion later that month.
In August, a federal court in Maryland denied Kalshi's request to block the state regulator.
Other platforms offering event contracts, such as Robinhood Markets and Crypto.com, have also filed lawsuits against state regulators, claiming they are being prevented from offering these products.
Earlier this month, a federal court in Nevada denied Crypto.com's request for an injunction.
Related: Republican Senator warns: Time is running out for the U.S. to pass cryptocurrency legislation
Original: “Prediction platform Kalshi sues NY gaming regulator, claims cease-and-desist order is overreach”
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