New York filed a lawsuit on Friday against KalshiEX LLC, accusing the prediction market platform of running an illegal gambling business in the state. Governor Kathy Hochul and Attorney General Letitia James said the state is seeking to halt the platform’s operations in New York and recover financial penalties.
The complaint says Kalshi launched in 2021 as a service that let users bet money on the outcomes of future events. In 2025, it expanded into sports trading and advertised legal sports betting markets to users across the country, according to the state.
New York argues that Kalshi’s contracts fit the state’s legal definition of gambling because users are wagering on uncertain future events outside their control, or on events that hinge on chance. Officials also said Kalshi operated without a New York State Gaming Commission licence, which they say allowed it to sidestep the rules and taxes that apply to licensed casinos and mobile sports betting operators.
The state further alleges that Kalshi allowed users aged 18 to 20 to participate, even though New York law requires bettors in mobile sports wagering to be at least 21. Hochul said the state’s gambling laws are meant to protect consumers, prevent problem gambling and support public schools, youth sports and gambling addiction education and treatment. James said prediction markets such as Kalshi are gambling platforms, “plain and simple”, regardless of what they are called.
The lawsuit asks the court to stop the alleged unlawful conduct, force Kalshi to forfeit illegal gains, return money to customers and pay civil fines equal to three times those gains. It follows an October 2025 cease-and-desist order from the Gaming Commission, and Kalshi’s own suit against the agency later that month seeking to block enforcement of New York gambling law. On 8 July, a federal court denied Kalshi’s request for temporary and preliminary relief against enforcement of the state’s gambling laws over its sports-related event contracts.
In April, James filed similar petitions against Coinbase Financial Markets and Gemini Titan, saying their event contracts were “quintessentially” gambling. The federal regulator has also entered the fight, with the Commodity Futures Trading Commission suing New York on 24 April to stop the state from applying gambling laws to CFTC-registered contract markets.
