* New York attorney general says Kalshi lacked gambling

license

* Increasingly popular prediction markets allow wagers on

sports, elections

* Kalshi had sued unsuccessfully for an injunction against

enforcement

* New York filed similar lawsuits against Coinbase, Gemini

platforms

By Jonathan Stempel

NEW YORK, July 31 (Reuters) - New York's attorney general

sued Kalshi on Friday, claiming that its prediction markets

platform violates state laws against illegal gambling.

In a petition filed in a state court in Manhattan, Attorney

General Letitia James said Kalshi failed to obtain a New York

State Gaming Commission license to operate its platform, where

people trade based on the predicted outcomes of events such as

sports and elections.

The attorney general said such platforms can encourage problem

gambling, including by people under age 21. She filed similar

petitions in April against two other prediction market

operators, Coinbase Financial Markets and Gemini Titan

.

"New York's gambling laws protect children from underage

betting and help combat gambling addiction," James said in a

statement. "No matter what they call themselves, prediction

markets like Kalshi are gambling platforms, plain and simple."

Prediction markets such as Kalshi and Polymarket have soared in

popularity since the 2024 U.S. presidential election, when they

fared better than pollsters in predicting Republican Donald

Trump's victory over Democrat Kamala Harris.

Their growth has sparked a flurry of lawsuits and

countersuits over the authority of individual U.S. states,

rather than the federal government, to regulate the industry.

The U.S. Commodity Futures Trading Commission has claimed

exclusive oversight, and challenged regulatory activity in at

least nine states.

FEDERAL JUDGE REJECTED PREEMPTIVE KALSHI LAWSUIT

James said Kalshi's prediction markets are gambling because

bettors don't control the outcomes of events.

She also objected to Kalshi letting 18- to 20-year-olds use

its platform, despite a minimum age of 21 under state law for

mobile sports betting.

James sued two days after the federal appeals court in Manhattan

rejected Kalshi's request to avoid being subjected to New York's

gambling laws, while it appeals a judge's refusal on July 8 to

grant a preliminary injunction against the state.

Kalshi had preemptively sued New York last October to block

enforcement.

U.S. District Judge Analisa Torres, however, found that the

state's interests in preventing gambling addiction, preserving

the integrity of sports, and avoiding ​a proliferation of

unregulated contracts "heavily" outweighed Kalshi's interests in

ensuring the primacy of federal law and avoiding "intractable"

technology issues for customers.

At least four states - Massachusetts, Michigan, Nevada and

Washington - have won court orders restricting Kalshi's

activities.

New York's lawsuit against Kalshi seeks the forfeiture of

illegal gains, civil fines equal to triple those gains, and

restitution to customers.

(Reporting by Jonathan Stempel in New York)

))