# Kalshi's $10B tax proposal rejected by New York amid regulatory crackdown CEO claims state prioritizes special interests over citizens' benefits - **Source:** [ReadWrite](https://brifing.si/source/7a996b61-bc09-4e57-8483-78f2ad9dd914) - **Published:** 2026-08-04 - **Topic:** [Finance](https://brifing.si/c/finance) - **Original article:** - **On Brifing:** https://brifing.si/s/cfb96a6e-948e-4336-9e81-e8a25553f849 ## $10 billion proposal Kalshi CEO Tarek Mansour revealed they proposed a tax framework that could generate nearly $10 billion for New York over five years. The plan involved establishing taxation for the prediction market industry. Mansour stated these funds could support schools and healthcare. However, state officials rejected the offer, emphasizing the figure hasn't been independently verified. ## State's firm stance New York Governor Kathy Hochul made clear that potential tax revenue wouldn't change the state's position. "Even if an illegal bookmaker offers the state a share of profits, we'll still shut them down," she asserted. On July 31, the state sued Kalshi, alleging the federally regulated exchange operates an illegal gambling business without state registration. ## Legal status conflict Kalshi maintains its contracts are financial derivatives regulated by the Commodity Futures Trading Commission (CFTC), not ordinary wagers under state gambling laws. The CFTC supported this jurisdictional argument by suing New York in April, asserting federal authority over event contracts. This creates a direct clash between state and federal regulatory frameworks. ## New York users in profit Mansour claimed Kalshi users in New York collectively made $200 million this year, while sportsbook customers lost $200 million during the same period. These figures remain unverified by independent sources. Mansour defended prediction markets against manipulation concerns, arguing participants have incentives to trade against distorted prices. ## Legal setback Kalshi suffered a significant legal defeat on July 7 when U.S. District Judge Analisa Torres denied its request for a preliminary injunction against New York's enforcement. The ruling demonstrated state consumer protection laws can't be bypassed. Governor Hochul and AG Letitia James emphasized that state gambling laws are designed to protect consumers. ## Tech giant parallels Mansour compared Kalshi's regulatory battles to early struggles of Uber and Airbnb. He stated the company remains open to discussions about consumer protections and reasonable taxation rather than leaving New York. This strategy mirrors how tech companies have historically approached new regulatory challenges in their growth phases. ## Market prediction reliability Mansour referenced Washington Post analysis of 2026 primary election markets, which found outcomes generally tracked market-assigned probabilities. However, experts caution these probabilities shouldn't be treated as certainties. These findings fuel ongoing debates about the validity and utility of prediction markets in financial and political forecasting. ## Federal-state clash significance This case represents a significant example of conflict between federal regulations and state laws. Kalshi's challenge demonstrates how fintech companies are testing traditional financial regulatory boundaries. The outcome could set important precedents for both the fintech industry and state regulators moving forward. ## Sources covering this story - https://readwrite.com/kalshi-ceo-new-york-rejected-10b-tax-proposal/ — --- _Summary written by Brifing from the original reporting. Copyright in the original article belongs to its publisher; read the full piece at the link above._