New York Attorney General Letitia James is joining a bipartisan coalition of states in a legal fight that could reshape how online betting platforms operate across the country.
James and 37 other attorneys general have filed a legal brief supporting Massachusetts in its lawsuit against prediction market company Kalshi, arguing the platform is illegally offering sports betting without complying with state gambling laws.
At the center of the dispute is whether platforms like Kalshi—known for allowing users to wager on the outcomes of events—can classify their offerings as financial instruments instead of gambling. State officials say that argument doesn’t hold up.
“Prediction markets cannot ignore states’ gambling laws that are designed to protect consumers,” James said, calling Kalshi’s sports-related contracts “illegal gambling by another name.”
Kalshi has argued its offerings fall under federal oversight as financial “swaps,” which would place them under the jurisdiction of the Commodity Futures Trading Commission and potentially override state-level restrictions. But the coalition of attorneys general contends that interpretation stretches federal law far beyond its intent.
The brief argues that the Dodd-Frank Act, cited by Kalshi, was designed to regulate complex financial instruments after the 2008 recession—not to legalize sports betting nationwide or strip states of their longstanding authority over gambling regulation.
The case carries broader implications for how states control betting activity within their borders. Attorneys general say state laws are specifically designed to address the risks tied to gambling, including addiction, youth exposure and consumer protections—areas they argue federal regulators are not equipped to handle.
Kalshi reported more than $1 billion in monthly wagers in 2025, with the vast majority tied to sports outcomes, according to the filing.
The coalition is urging Massachusetts’ highest court to uphold a lower court ruling that blocks Kalshi from offering sports betting in the state without a license while the case proceeds.
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