New York State Sues Prediction Market Platform Kalshi Over Unlicensed Betting Operations
New York state officials have filed a lawsuit against prediction market platform Kalshi, accusing it of operating unlicensed betting on sports, elections, and other outcomes. The action, led by Attorney General Letitia James, seeks to halt the company’s operations in the state and impose significant financial penalties.
According to the lawsuit, Kalshi’s markets qualify as gambling under New York law because participants risk money on uncertain results beyond their control. Officials noted the company launched in 2021 and added sports-related contracts in 2025, advertising them as legal nationwide trading options. The platform allows users as young as 18 to participate, bypassing the state’s minimum age of 21 for mobile sports wagering.
James said, “New York’s gambling laws protect children from underage betting and help combat gambling addiction. No matter what they call themselves, prediction markets like Kalshi are gambling platforms, plain and simple. By ignoring our laws, Kalshi is running an illegal operation and harming New Yorkers in the process. We are taking them to court to uphold our laws and protect New Yorkers.”
The state is seeking billions of dollars in penalties, with officials estimating the total could exceed $36 billion before a full accounting is completed. The lawsuit also demands restitution for customers, civil penalties equal to three times the company’s alleged gains, and an additional $100,000 for each alleged instance of offering unlicensed sports wagering.
State regulators previously issued a cease-and-desist order in October 2025 directing Kalshi to stop unlicensed operations. Kalshi maintains that its event contracts fall under federal derivatives regulation by the Commodity Futures Trading Commission (CFTC) rather than state gambling rules.