A $36 billion lawsuit just turned Kalshi’s $40 billion valuation race into a federal market emergency
The CFTC ordered Kalshi to keep operating after Kalshi declared a market emergency tied to New York’s enforcement actions. The regulator said state pressure could disrupt a federally regulated derivatives exchange and warned that New York’s lawsuit could expose Kalshi to over $36 billion in damages. New York Attorney General Letitia James is suing, arguing Kalshi runs unlicensed sports prediction markets and must face gambling, tax, consumer-protection, restitution, and penalty rules. CFTC Chairman Michael Selig said states cannot impose a patchwork of gambling laws on interstate event contracts. The fight is part of a broader federal-state clash over whether CFTC oversight preempts state gaming law. Separately, New York City is reviewing prediction-market marketing practices and has asked Kalshi, Polymarket, Coinbase, and Gemini Titan for information amid concerns about deceptive promotions. Despite the scrutiny, Kalshi’s business is growing quickly, with reported revenue surging and a new funding round reportedly targeting a $40 billion valuation.
