On August 3, Kalshi CEO Tarek Mansour defended the prediction market operator as New York initiated a lawsuit seeking at least $36 billion in damages, penalties, and related relief.
Summary
- New York is pursuing a minimum of $36 billion, asserting that Kalshi operates without a licensed gambling platform.
- Kalshi has moved the case to federal court, temporarily halting New York’s request for a preliminary injunction.
- Mansour compared Kalshi to Nasdaq, noting that the exchange connects traders and charges transaction fees.
- Federal courts previously rejected Kalshi’s effort to prevent New York from enforcing its state gambling laws.
- The upcoming legal dispute will focus on federal jurisdiction, remand issues, and whether state gambling regulations can coexist with federal laws.
In a CNBC interview, Mansour emphasized the parallels between Kalshi and Nasdaq, arguing that the state’s claims threaten the wider event contract industry.
The legal case has moved from New York state court, with Kalshi transferring it to the U.S. District Court for the Southern District of New York just after Attorney General Letitia James filed it on July 31.
Justice Melissa A. Crane of the New York Supreme Court deemed the state’s request for a preliminary injunction moot since it was no longer within her jurisdiction, according to court documents shared by gaming law attorney Daniel Wallach. This ruling was procedural and did not dismiss New York’s claims.
Kalshi’s lawsuit shifts to federal court
New York’s formal petition charges Kalshi with repeatedly violating state gambling laws by offering event contracts without a license from the New York State Gaming Commission. The state is seeking a permanent injunction, an accounting of customer activities, restitution, disgorgement, civil penalties, and $100,000 for each alleged unauthorized sports wager. These claims remain unproven and have yet to result in a final ruling.
The firm moved the case to federal court around eight hours after the state’s filing, arguing that New York was attempting to impose regulations on a derivatives exchange overseen by the Commodity Futures Trading Commission. As reported by crypto.news, the state initially sought immediate restrictions while the broader case unfolded.
Justice Crane’s order temporarily removes the state court request from consideration. Wallach pointed out that New York could refile the motion if a federal judge remands the case back to state court. A remand decision would clarify the appropriate venue but not the legality of Kalshi’s offerings.
Mansour reinforces Kalshi’s Nasdaq comparisons
Mansour refuted New York’s depiction of Kalshi as an unlicensed sportsbook. He clarified that users transact with each other while the platform facilitates these trades and collects fees. He further asserted that officials could “copy and paste that lawsuit and file it against Nasdaq,” extending his defense beyond merely sports-related markets.
This analogy supports Kalshi’s core argument that event contracts function as financial instruments rather than conventional bets. The company is registered with the CFTC as a designated contract market, allowing clients to take opposing positions on prospective events. New York contends that this framework does not alter the gambling nature of the products under state law.
Mansour also likened Kalshi’s regulatory hurdles to past issues faced by Uber and Airbnb, characterizing the state action as resistance from established gaming operators against a new competitor. This perspective remains Kalshi’s position. New York maintains that its case addresses licensing, consumer protections, tax obligations, and compliance with the state’s minimum age for sports betting.
The CEO reported that New Yorkers collectively earned over $200 million on Kalshi during 2026. He also suggested a proposal for a system that could yield nearly $10 billion in state tax revenue over five years. Mansour did not provide confirming calculations during the interview, so these numbers should be viewed as company statements rather than verified facts.
New York asserts event contracts signify unlawful gambling
The Attorney General’s office claims that the company allows customers to bet on future events outside their control, aligning with New York’s definition of gambling. The petition references contracts involving professional sports, college games, elections, and entertainment, asserting that Kalshi charges fees to customers for placing these bets.
Additionally, New York claims that individuals aged 18 to 20 can access the platform, despite the state law mandating a minimum age of 21 for mobile sports betting. The state contends that licensed operators must comply with local consumer protections and contribute gaming taxes. The prediction market operator disputes the state’s authority to enforce such regulations on a federally registered exchange.
The petition also cites a reported company valuation of $22 billion and an annual transaction volume of $178 billion. These figures are derived from Kalshi’s state filing and are not court determinations; the ultimate financial exposure remains uncertain pending further accounting and judgment.
Federal and state regulators face ongoing conflict
This latest removal follows a previous setback for the prediction market operator. On July 7, U.S. District Judge Analisa Torres denied Kalshi’s request to prevent the New York State Gaming Commission from enforcing state gambling laws on its sports contracts. She found that Kalshi had not demonstrated sufficient evidence at the preliminary stage indicating that the Commodity Exchange Act superseded New York’s regulations. Kalshi appealed, but its requests for urgent protection were also denied.
The CFTC holds a differing perspective, asserting in a federal complaint from April that Congress granted it exclusive authority over swaps and contracts traded on registered derivatives exchanges. Meanwhile, New York asserts that states maintain traditional power to regulate gambling within their jurisdictions.
The approach to this issue varies across the country. In related incidents, a judge in Washington blocked Kalshi’s sports contracts, stating that state gambling laws could apply, while a federal judge in Minnesota reached a different initial conclusion, temporarily blocking that state’s prediction market prohibition.
The federal judge overseeing the newly removed case in New York now faces the challenge of determining whether federal jurisdiction applies and whether the case should remain in federal court. A remand would enable New York to renew its injunction application in state court, while maintaining the case in federal court would place the dispute within the same judicial system already addressing related questions regarding CFTC authority and federal preemption.
