New York has sued Kalshi, accusing the prediction market company of running an illegal online gambling operation through contracts tied to sports and other events. The state filed the case in Manhattan state court on Friday and is asking a judge to halt Kalshi’s business in New York, seize alleged illegal gains, award restitution and impose fines equal to three times those gains.
The attorney general’s office says Kalshi’s contracts meet the state’s legal definition of gambling because users are wagering on uncertain future events they do not control. Governor Kathy Hochul and Attorney General Letitia James said the company has ignored New York’s gaming laws, which they say are meant to protect consumers, curb problem gambling and support public services through tax revenue.
The state also says Kalshi has operated without a New York State Gaming Commission licence. According to the complaint and the attorney general’s office, that lets the company avoid the regulations and taxes that apply to licensed casinos and mobile sports betting operators.
A further allegation is that Kalshi allowed users aged 18 to 20 to participate, even though New York requires bettors to be at least 21 for mobile sports wagering.
Kalshi launched in 2021 as a prediction market in which users could wager on the outcome of future events. In 2025 it expanded into sports-related markets, advertising legal sports trading to users nationwide.
The lawsuit builds on an earlier dispute between the company and state regulators. In October 2025, the New York State Gaming Commission ordered Kalshi to stop operating what it called an unlicensed mobile sports wagering platform, and Kalshi responded with a lawsuit of its own.
That fight reached federal court this month. On July 7, a federal judge in Manhattan denied KalshiEX LLC’s request for an emergency order blocking New York enforcement, and a later ruling by the federal appeals court also went against the company. Less than an hour before New York filed its own case, the Commodity Futures Trading Commission sought to stop the state’s enforcement effort in Manhattan federal court, calling it overreach.
Kalshi has pushed back, saying the dispute is political theater and arguing that states cannot shut down what it calls a federally licensed exchange. Reuters reported that at least four states, Massachusetts, Michigan, Nevada and Washington, have won court orders restricting Kalshi’s activities.
