New York has filed a $36bn lawsuit against prediction market Kalshi, claiming the platform operates as an unlicensed sportsbook. Katie Neer, a former aide to Governor Andrew Cuomo and now a lawyer with lobbying firm Dickinson & Avella, suggested the state should tax prediction market operators and collect revenue while litigation continues.
Kalshi previously proposed a 6% tax on transactions, saying it would generate around $10bn over five years. Chelsea Davis, deputy secretary for gaming, cannabis and alcohol under Governor Kathy Hochul, rejected the idea. Licensed sportsbooks pay 51% on revenue, and the state should not legitimise illegal activity for income, she said. Davis added that some prediction market contracts provoke public backlash and risk harming the state's regulated gaming sector.
A day before a panel at the Racing and Gaming Conference in Saratoga Springs, Commodity Futures Trading Commission chair Michael Selig used the agency's emergency powers to shield Kalshi from legal consequences in New York. Dan Ullman, a lawyer at international firm Orrick, expects the dispute to reach the Supreme Court.
Prediction markets have so far avoided horse racing, which is governed by separate federal law for interstate wagering. Polymarket briefly ran contracts on the Kentucky Derby but pulled them after a demand from Churchill Downs.
