New York’s lawsuit seeks to stop Kalshi from running what state officials claim is an unlicensed gambling business and demands financial remedies tied to the alleged activity.
The state has filed a case against prediction-market platform Kalshi, accusing it of offering sports and event-based contracts that function as wagers without obtaining approval from New York gaming authorities.
The complaint, filed Friday in the New York Supreme Court, asks a judge to prohibit Kalshi from continuing operations that the state considers unauthorized gambling. It also requests a detailed accounting of customer bets, losses, and company revenue, along with restitution, damages, and civil penalties.
According to a joint statement from Governor Kathy Hochul and Attorney General Letitia James, New York is seeking a penalty equal to three times Kalshi’s alleged profits, plus an additional $100,000 for each unauthorized or attempted sports betting or mobile wagering transaction.
James said the state’s gambling rules are intended to protect young people and address the risks associated with gambling addiction. She argued that platforms offering prediction-based wagers should be classified as gambling services regardless of how they market themselves.
Kalshi, which reportedly targeted a $40 billion valuation during a June funding round, is facing growing regulatory pressure alongside the wider prediction-market industry. The company and rival Polymarket recently secured a temporary legal win in Minnesota after a federal court determined that the state’s restrictions on prediction markets could conflict with the Commodity Exchange Act. The court issued a preliminary injunction preventing enforcement of the law against the companies and the Commodity Futures Trading Commission.
Kalshi’s communications head Elisabeth Diana pushed back against New York’s lawsuit, calling it political interference. She argued that states cannot simply restrict a federally licensed exchange and warned that such actions could force users toward offshore platforms. She added that Kalshi remains committed to its New York customers.
New York officials described Kalshi’s event contracts as betting products, claiming the platform offers markets tied to professional and college sports, elections, and cultural events. The lawsuit alleges that Kalshi permits users aged 18 to 20 to participate and offers contracts involving New York college teams, both of which are prohibited under the state’s licensed sports betting rules.
Kalshi experienced rapid growth during the World Cup, adding 3 million users throughout the tournament, according to CNBC. That growth more than doubled the company’s previously reported user base of 2 million at the start of May.
The attorney general’s office said the lawsuit follows an October cease-and-desist notice issued by the New York State Gaming Commission.
Kalshi previously attempted to block state regulatory action, but a federal judge denied the request on July 7 and later rejected a request for an injunction while the appeal process continued on July 27.
