New York Sues Kalshi Over Alleged Illegal Gambling

New York Attorney General Letitia James filed a lawsuit in state court in Manhattan on July 31, 2026, accusing prediction market operator Kalshi of running an illegal gambling operation in the state. The petition describes Kalshi’s event contracts as bets on outcomes including professional and college sports, elections and cultural events. State authorities allege the platform is operating without the required license from the New York State Gaming Commission.

The complaint seeks injunctive relief that would bar Kalshi from conducting what New York characterizes as an unlicensed gambling business in the state. As part of that relief, the attorney general is asking the court to halt Kalshi’s New York operations while the case proceeds and to require a full accounting of customer bets, losses and company gains tied to its event contracts.

New York’s filing asserts that Kalshi failed to obtain a state gaming license despite offering event-based wagering to residents. The petition further alleges that Kalshi’s platform was available to individuals aged 18 to 20, which the state says violates New York’s minimum age requirement of 21 for mobile sports betting. These claims form a core part of the argument that the platform is operating in violation of state gambling laws.

The lawsuit seeks extensive financial remedies in addition to the requested injunction. New York is asking for restitution to affected customers, forfeiture and disgorgement of what it calls illegal gains, and civil penalties equal to three times those gains. The complaint also requests $100,000 penalties for each unauthorized sports-wagering offer made through the platform.

Kalshi has publicly rejected the state’s characterization of its business. In a statement, the company called the action “political theater” and argued that “states can’t just shut down a federally licensed exchange.” Kalshi also emphasized its ties to New York, stating that it values its relationship with New Yorkers and asserting that users in the state value its product.

The legal dispute has drawn in federal regulators through a separate proceeding. The Commodity Futures Trading Commission filed an emergency motion in federal court in Manhattan seeking to block New York from pursuing enforcement against Kalshi. In its filing, the CFTC contends that the Commodity Exchange Act grants it exclusive jurisdiction over contracts traded on federally registered exchanges, which would include Kalshi.

These parallel actions set up a jurisdictional conflict between state and federal authorities over how prediction markets should be regulated. The outcome will determine whether a federally registered exchange such as Kalshi must comply with New York’s gambling regime in addition to federal oversight, or whether federal authority alone governs the trading of its event contracts.