New York Attorney General Letitia James filed a lawsuit against prediction market platform Kalshi, accusing it of operating an unlicensed gambling business within the state. The petition, submitted alongside a motion for a temporary restraining order, seeks at least $36 billion in damages and demands that Kalshi be shut down and forced to forfeit three times its earnings.
The legal filing lists eight counts against Kalshi, including violations of the New York Constitution’s gambling ban, bookmaking, possession of gambling records, unlicensed mobile sports wagering, and the federal Wire Act. State investigators placed test bets, such as four contracts on a college sports game for $1.14 including fees, to demonstrate that the platform allowed wagering on events involving New York college teams—something even licensed operators cannot offer. The petition also asserts that Kalshi permits users as young as 18 to open accounts, below New York’s legal gambling age of 21.
Governor Kathy Hochul stated that Kalshi “chose to ignore New York’s gaming laws” and that the state aims to stop its “illegal behaviour” while delivering funding for public services. The lawsuit demands full restitution to users, repayment of proceeds, and an additional $100,000 for each offering of sports wagering.
The case has collided with federal regulatory authority. The Commodity Futures Trading Commission (CFTC) sued New York in April to establish exclusive federal oversight of event contracts. On Thursday, just before the state’s action, the CFTC asked a court to block New York from pursuing any civil or criminal enforcement against Kalshi or other CFTC-registered platforms. New York nonetheless proceeded with its filing the next day. Kalshi has faced similar setbacks in other states: courts in Michigan and Washington have restrained the platform, while a Minnesota judge allowed continued operations during a challenge to that state’s prediction-market ban.
The legal battle underscores a broader campaign by the Trump administration, with the CFTC suing Illinois, Arizona, Connecticut, Wisconsin, and Minnesota over their attempts to police event contracts. Kalshi’s own data, cited in the petition, puts its valuation at $22 billion and its annualized trading volume at $178 billion, with monthly volume reaching $33 billion in June.
