New York Attorney General Letitia James and Governor Kathy Hochul announced a lawsuit against KalshiEX LLC (Kalshi) on July 31, 2026, accusing the company of running an illegal, unlicensed gambling operation through its prediction market platform. Kalshi, which launched in 2021, allowed users to bet on the outcomes of various future events, including sports, culture, and elections. The lawsuit states that Kalshi’s sports "trading" launched in 2025, despite the company's claim that it offered legal sports betting markets.
The Office of the Attorney General (OAG) investigation found that Kalshi's platform is an illegal gambling scheme, exposing New Yorkers, including those under 21, to financial and personal risks. The lawsuit alleges that the outcomes on Kalshi's platform are uncertain and outside the bettors' control, classifying them as games of chance. Kalshi has not obtained a license from the New York State Gaming Commission, thereby sidestepping tax obligations that fund public schools, youth sports programs, and problem gambling education and treatment.
New York is seeking a court order to stop Kalshi from operating as an unlicensed gambling business in the state. The OAG is demanding that Kalshi forfeit all illegal gains, pay fines equal to three times those gains, and provide restitution to affected consumers. According to court filings, the requested compensatory damages could total at least $36 billion. A motion for a temporary restraining order has also been filed to halt Kalshi's relevant event contracts in New York, and it seeks an additional $100,000 for each offering.
Kalshi's monthly trading volume reached $33 billion in June, making it the largest prediction market platform globally, surpassing rivals like Polymarket. The Attorney General emphasized the potential for such platforms to encourage problem gambling and endanger the financial, emotional, and physical health of individuals, particularly those under legal gambling age. Governor Hochul highlighted the association of gambling among young people with psychological distress, financial difficulties, and increased risk of gambling-related harms later in life.
