Tish James, Kathy Hochuls pursuit of Kalshi raises questionsabout why theyre ignoring Polymarket
State regulators taking aim at prediction markets for regulation isn’t new, but according to Kalshi, what is new is New York singling out its business as an “illegal gambling operation” for much of the same wagering that can be found on just about every similar platform, On The Money has learned.At issue: A lawsuit recently filed by New York Attorney General Tish James with the full blessing of fellow Dem Gov.Kathy Hochul.
Kalshi says the suit takes aim at its entire business model – everything from predicting the outcomes of “Big Brother Season 28,” to the outcomes of various political races to the biggest-ticket items involving sports.The civil lawsuit charges that Kalshi’s business model is “illegal” because it’s essentially a gambling hub, a high-end bookie that needs to be regulated and licensed by the state the same way as casinos and other “legal” wagering operations.Among the remedies the state is seeking is Kalshi getting licensed by the state, and turning over billions of dollars in what it describes as ill-gotten gains.Kalshi argues the suit is a death blow to its business since it doesn’t consider itself a gambling company, but something more like a commodities exchange that doesn’t meet state licensing requirements.
It’s regulated by the federal government because it’s actually offering futures contracts, not much different than the puts and calls monitored by the Commodity Futures Trading Commission.Plus, it offered James and Hochul lots of remedies that were rejected.The battle between states and the feds over various regulated businesses like brokers has been raging for years, with the NY AG’s office being in the middle of it.
Who can forget how Eliot Spitzer made a career targeting alleged Wall Street fraud that for years came under the jurisdiction of the federal Securities and Exchange Commission (that is, before he became governor and resigned in disgrace over a prostitution scandal).My best guess is that the...