New York sues prediction market platform Kalshi, calling it illegal gambling operation

New York Attorney General Letitia James and Governor Kathy Hochul filed a lawsuit in Manhattan state Supreme Court accusing prediction-market platform Kalshi of operating an illegal, unlicensed gambling business. The complaint seeks to halt Kalshi’s operations in the state, force the company to forfeit alleged illegal gains, and impose fines and restitution totaling an estimated $36 billion.

State officials argue that Kalshi’s trading on sports, political and other events meets the legal definition of gambling because outcomes are uncertain and beyond the bettor’s control. They contend the company has not obtained a license from the New York Gaming Commission, has avoided taxes required of licensed casinos and mobile sports-betting operators, and allows users as young as 18, whereas state law requires a minimum age of 21 for mobile sports betting.

Kalshi, which maintains that it is a federally licensed exchange regulated by the Commodity Futures Trading Commission, said the lawsuit represents “political theater” and warned that shutting down a federally regulated platform would push New Yorkers to offshore services. The company has previously sued the Gaming Commission after being ordered to cease an “unlicensed mobile sports wagering platform” in the state.

The case adds to a growing wave of state actions against prediction-market platforms, including earlier suits against Coinbase and Gemini. Federal judges have recently issued temporary blocks on similar state bans in Minnesota and Arizona, highlighting the ongoing jurisdictional dispute between state gambling regulators and the federal CFTC.