New York Attorney General sues Kalshi, seeking $36 billion over alleged illegal sports prediction markets

New York Attorney General Letitia James has filed a lawsuit against Kalshi, a platform that offers prediction markets tied to sporting events. The complaint alleges that Kalshi is operating an illegal gambling operation and seeks a court order to stop the company from offering sports-related prediction markets without a state gambling license. The state is also demanding at least $36 billion in financial penalties based on the revenue Kalshi earned from these markets, plus a $100,000 fine for each instance of alleged unlicensed wagering.

Kalshi and similar firms argue that sports-related prediction markets are not gambling, a distinction that has prompted legal debate over the overlap between federal regulation of prediction markets and state authority over gambling. The case adds to a series of lawsuits across the country that could ultimately be resolved by the U.S. Supreme Court, which has previously ruled on the balance of state and federal powers in the gambling sector.

"We will enforce New York’s gambling laws and hold companies accountable for offering unlicensed sports wagering," James said in a statement.

The lawsuit highlights ongoing tensions between federal allowances for prediction markets and state efforts to regulate or prohibit sports betting within their jurisdictions.