New York sues Kalshi for illegal gambling
The lawsuit asks the court to order Kalshi to pay fines, forfeit all illegal gains, and pay restitution to consumers who were harmed
New York Governor Kathy Hochul and Attorney General Letitia James are taking legal action to bring Kalshi into compliance with state law.
Kalshi is being sued for running an illegal gambling operation in New York through its prediction market platform.
An investigation by the Office of the Attorney General (OAG) found that Kalshi’s prediction market is an illegal, unlicensed gambling operation that exposes New Yorkers – including those under the legal gambling age of 21 – to “serious personal and financial risk.”
The lawsuit is seeking a court order stopping Kalshi from operating as an unlicensed gambling business and requiring the company to pay fines, forfeit all illegal gains, and pay restitution to users.
“Kalshi has chosen to ignore New York’s gaming laws, which exist to protect consumers, prevent problematic gambling, deliver funding for critical public services, and ensure that every company plays by the same rules,” Governor Hochul said. “This choice has consequences, and working closely with Attorney General James, New York is taking action to stop this illegal behavior and bring Kalshi into compliance, because no company is above the law.”
In October 2025, the New York State Gaming Commission issued a cease-and-desist order to prevent Kalshi from offering sports contracts in New York.
Instead of ceasing its operations, Kalshi sued the Commission and its Commissioners in the US District Court, forcing the Commission to refrain from undertaking enforcement action against Kalshi.
Earlier this month, however, the Court denied Kalshi’s motion for a preliminary injunction.
“New York’s gambling laws protect children from underage betting and help combat gambling addiction,” said Attorney General James. “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.”
The lawsuit alleges that Kalshi’s prediction markets meet the legal definition of gambling because the outcomes of the events on which its users are betting are uncertain and outside the control of the bettor or hinge on a game of chance.
The state government also noted that Kalshi has failed to obtain a license from the Commission, sidestepping its obligation to pay taxes like licensed casinos and mobile sports gambling platforms do.
Kalshi’s prediction markets are also available to users between the ages of 18-20, even though New York law requires a person to be at least 21 years old to participate in mobile sports betting.
In the lawsuit filed Thursday, OAG asks the court to order Kalshi to forfeit all illegal gains, distribute restitution to consumers who were harmed, and pay fines equal to three times the gains it made through its illegal actions.
This is the latest action in Governor Hochul and Attorney General James’ continued efforts to enforce New York’s gambling laws and protect New York consumers.
In April, Attorney General James sued Coinbase and Gemini for running illegal gambling platforms, while Governor Hochul signed an Executive Order banning state employees from engaging in insider trading using prediction markets like Kalshi.
In early July, a federal judge for the Southern District of New York rejected Kalshi’s request for a preliminary injunction seeking to prevent the New York State Gaming Commission from enforcing state gambling laws against its event contracts.
Last week, Kalshi reached an agreement with the Nevada Gaming Control Board to implement geofencing technology to prevent customers in Nevada from trading certain prohibited event contracts. This includes contracts on sports, elections and entertainment-related events.
https://www.gamingintelligence.com/legal/234260-new-york-sues-kalshi-for-illegal-gambling/