New York Attorney General Letitia James and Governor Kathy Hochul announced a lawsuit against Kalshi, accusing the prediction market platform of running an illegal, unlicensed gambling operation in the state. The Office of the Attorney General (OAG) asserts that Kalshi allows users to bet money on the outcomes of events such as sports, elections, and cultural happenings, which falls under the legal definition of gambling in New York.
The lawsuit seeks a court order to stop Kalshi from operating as an unlicensed gambling business in New York. It also demands that Kalshi forfeit all illegal gains, pay restitution to consumers who were harmed, and incur fines equal to three times the gains made through its illegal activities. Additionally, the state is seeking $100,000 for each unauthorized or attempted offer of sports or mobile sports wagering through the platform.
Kalshi, which launched in 2021 and introduced sports "trading" in 2025, has been widely available across all 50 states. The OAG's investigation found that Kalshi failed to obtain a license from the New York State Gaming Commission, thereby sidestepping tax obligations that would otherwise fund public schools, youth sports programs, and problem gambling education. The state alleges that Kalshi's activities expose New Yorkers, including those under the legal gambling age of 21, to significant financial and personal risks, including psychological distress and gambling-related harms.
Court filings indicate that the requested compensatory damages could total at least $36 billion, pending a full accounting of Kalshi's profits and customer bets. This figure is based on the potential for treble civil penalties and the company's substantial trading volume; Kalshi's monthly volume reached $33 billion in June. The state has also filed a motion for a temporary restraining order to immediately halt Kalshi's relevant event contracts in New York while the lawsuit proceeds.
