The New York vs. Kalshi court battle has spilled into another arena, one that is potentially even more combative: social media.
New York Gov. Kathy Hochul, who is no fan of Kalshi and has said the company is ignoring New York’s gaming laws, took to X Wednesday to take Kalshi to task for “turning cancer patients into prop bets.”
She was referring to the prediction market operator offering contracts on whether the Food and Drug Administration (FDA) will approve drugs for all manner of disease, including a variety of cancers.
Additionally, per New York Times reporting, Kalshi is planning to offer contracts on drugs still in the trial stage.
Fighting fire with fire, the co-founder and COO of Kalshi, Luana Lopes Lara, fired back at the governor, claiming what Hochul said was “a flat out lie” and that the markets “can bring more transparency and efficiency to a complex industry.”
While the ensuing comments in the thread were predictable enough — people claiming Hochul trialed mRNA drugs on children during COVID to people wondering “why the f*** would you create ‘betting markets’ on f****** medications and FDA approvals” — one comment, outside the thread, seemed to answer the pro-Kalshi contingent. It was posted by Renny Zucker of Citrini Research, pointing out the difference between capital markets and prediction markets.
Strongly worded letter
Kalshi is not only dealing with pushback from the governor of New York. In a public comment filed with the CFTC last month, researchers at Harvard Medical School and Brigham and Women’s Hospital asked the regulatory agency to completely nix these types of markets.
The letter, from Dr. Thomas Hwang and the hospital’s Program On Regulation, Therapeutics, And Law, says that betting on whether a drug clears an FDA trial should be off-limits, claiming the small group of people who actually know how a trial is going — the independent safety boards, the site investigators, the patients themselves — are sitting on confidential health data, and Hwang believes a live market gives them financial incentive to trade on it.
Some horrible thoughts Hwang floated include patients misreporting symptoms to protect their positions or an investigator tilting the results to make money.
The suit
On July 31, New York filed suit against Kalshi in state court, asking for $36 billion. The state sued at 12:01 a.m., the first minute it was allowed to, after a federal district court and the Second Circuit both turned down Kalshi’s requests for an injunction.
New York got to that $36 billion figure by taking three times Kalshi’s gains and adding $100,000 for every bet placed in the state. Kalshi has brought in $1.6 billion in fees since it launched, and its last fundraise valued the company at $22 billion.
The state’s complaint calls Kalshi “quintessentially gambling” and says it runs without a license. Kalshi has already tried to move the case to federal court, the same move it has made in other state suits and lost every time. If New York wins, it would be the largest state to ban Kalshi’s contracts.
