New York Sues Kalshi Over Unlicensed Prediction Market Operations
New York Sues Kalshi Over Unlicensed Prediction Market Operations #
New York Governor Kathy Hochul and Attorney General Letitia James filed a lawsuit Friday against prediction market platform KalshiEX, alleging the company operates an illegal, unlicensed gambling business in the state.
The petition, filed in Manhattan state court, claims Kalshi has accepted wagers without registering with the New York State Gaming Commission and has not paid taxes required of licensed casinos and mobile sports betting operators. The attorney general’s office is seeking a court order to stop Kalshi’s New York operations, compel forfeiture of profits from those activities, distribute restitution to harmed consumers, and impose fines of up to three times the company’s unlawful gains, a remedy that could expose Kalshi to billions of dollars in liability.
“No matter what they call themselves, prediction markets like Kalshi are gambling platforms, plain and simple,” Attorney General James said. “By ignoring our laws, Kalshi is running an illegal operation and harming New Yorkers in the process.”
The lawsuit also raises concerns about underage access. New York’s minimum age for mobile sports betting is 21, but the attorney general’s investigation found that Kalshi allowed users aged 18 to 20 to access its platform.
Kalshi, headquartered in New York and operating since 2021, expanded into sports-related prediction markets in 2025. The company argues it is regulated federally by the Commodity Futures Trading Commission and that states have no authority to impose their own gambling frameworks on it. “States can’t just shut down a federally licensed exchange,” spokesperson Elisabeth Diana said, adding that enforcement would drive New Yorkers to offshore platforms.
Friday’s action follows a series of legal setbacks for Kalshi. New York’s Gaming Commission issued a cease-and-desist order last October, prompting Kalshi to file a preemptive federal lawsuit against the commission. A federal district judge declined to grant an injunction on July 8, and earlier this week the Second Circuit Court of Appeals also rejected Kalshi’s bid to pause state enforcement while its appeal proceeds.
The suit is part of a wider dispute over jurisdiction in the prediction market sector. New York’s attorney general filed similar suits in April against Coinbase Financial Markets and Gemini Titan, while Rhode Island sued Kalshi and rival Polymarket in May. Courts have issued conflicting rulings: a federal judge this week blocked Minnesota from banning prediction markets outright, while a Wisconsin court upheld that state’s right to regulate them. The CFTC has warned in filings that state-by-state enforcement could bring “entire federally regulated markets to the brink of destruction.”
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