New York State Sues Prediction Market Platform Kalshi Over Unlicensed Betting Operations

New York state officials target the prediction market platform Kalshi in a lawsuit over claims of unlicensed betting on sports, elections and other outcomes.

The action seeks to halt the company’s activities in the state while imposing significant financial penalties, according to New York Attorney General Letitia James.

According to the lawsuit, the platform’s markets qualify as gambling under state law because participants risk money on uncertain results beyond their control.

Officials note the company launched its service in 2021 and added sports-related contracts in 2025 while advertising them as legal nationwide trading options.

The platform permits participation by users as young as 18, bypassing the state’s minimum age of 21 for mobile sports wagering.

Says James,

“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.”

New York is seeking billions of dollars in financial penalties against Kalshi, with state officials estimating the total could exceed $36 billion before a full accounting is completed.

The lawsuit also seeks restitution for customers, civil penalties equal to three times the company’s alleged gains from the activity and an additional $100,000 for each alleged instance of offering unlicensed sports wagering in the state.

State regulators previously issued a cease-and-desist order in October 2025 directing the firm to stop unlicensed operations.

Kalshi maintains its event contracts fall under federal derivatives regulation by the Commodity Futures Trading Commission (CFTC) rather than state gambling rules.

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