New York has joined a growing list of states suing Kalshi for allegedly running an 'illegal gambling operation.' In the lawsuit, Attorney General Letitia James accuses Kalshi of violating state laws by accepting wagers without a license from the state’s gaming commission.

The investigation found that Kalshi exposes New York residents to serious personal and financial risks, including those under 21. The state is seeking to block Kalshi from operating in the state and demanding restitution for customers who placed bets on the platform.

Beyond legal concerns, Kalshi has also raised insider trading fears. A recent report highlighted that President Trump’s teleprompter operator made $100,000 betting related to the former president's speeches on Kalshi. This puts pressure on prediction markets and their integrity.

While some states have tried to regulate prediction markets like Polymarket, federal authorities, such as the Commodity Futures Trading Commission (CFTC), claim exclusive jurisdiction over them. However, many states argue this authority does not apply to sports wagering.

Kalshi’s head of communications, Elisabeth Diana, criticized the lawsuit, saying it would hurt New Yorkers and drive them 'offshore.' This only adds to the debate on regulating prediction markets globally.