New York sues Kalshi over alleged illegal gambling operation targeting sports and prediction markets across the state

Albany, New York – New York state officials have launched legal action against prediction market company Kalshi, accusing the platform of operating an illegal gambling business and exposing residents, including young adults, to unlicensed betting activities.

Governor Kathy Hochul and Attorney General Letitia James announced the lawsuit against KalshiEX, LLC, saying the company has been offering what it describes as prediction markets while allegedly bypassing New York’s gambling laws. According to state officials, the company has allowed users to place money on the outcomes of sporting events and other future occurrences without obtaining the licenses required to legally operate in New York.

The lawsuit asks the court to halt Kalshi’s operations within the state and seeks financial penalties that include forfeiture of profits, restitution for affected consumers, and fines tied to the company’s alleged illegal earnings.

State officials argue that although Kalshi presents its services as prediction markets or event trading, the platform’s offerings meet New York’s legal definition of gambling. Investigators from the Office of the Attorney General concluded that users are risking money on uncertain future events that are outside their control, making the activity subject to state gambling regulations.

Kalshi first entered the market in 2021, initially allowing customers to wager on the outcomes of various future events. The company later expanded its offerings significantly. In 2025, it introduced sports-related contracts that it promoted as legal sports trading available to customers across all 50 states. Today, the platform offers contracts tied to sports competitions, cultural events, elections, and numerous other topics through both its website and mobile application.

New York officials contend that despite offering these products to residents, Kalshi never obtained authorization from the New York State Gaming Commission, allowing it to avoid the oversight and tax obligations imposed on licensed casinos and legal mobile sports betting operators.

Governor Hochul said the state is committed to enforcing those rules equally across the gambling industry.

“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.”

Officials emphasized that gambling regulations are intended to serve purposes beyond licensing requirements. Revenue collected from regulated gambling helps support public schools, youth sports initiatives, and programs aimed at educating people about gambling addiction while providing treatment resources for those affected.

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Attorney General James said the state’s legal framework exists to safeguard consumers, particularly younger individuals who may be more vulnerable to gambling-related harm.

“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.”

One of the central concerns raised in the lawsuit involves age restrictions. According to the Attorney General’s Office, Kalshi’s platform has been accessible to individuals between the ages of 18 and 20. Under New York law, however, participants in mobile sports betting must be at least 21 years old.

State officials argue that allowing younger adults access to these betting markets increases the risk of financial losses and other long-term consequences. The lawsuit points to research indicating that gambling among younger people has been linked to psychological distress, financial hardship, and a greater likelihood of developing gambling-related problems later in life.

Investigators also argue that Kalshi gained an unfair competitive advantage by operating without a state license while licensed operators continue to comply with regulatory standards, consumer protections, and taxation requirements.

The complaint seeks several forms of relief. In addition to asking the court to stop Kalshi from continuing its alleged illegal operations in New York, the Attorney General’s Office wants the company to surrender all profits generated through the business. The lawsuit also requests restitution for consumers who were harmed and financial penalties equal to three times the gains the company allegedly earned through its unlawful conduct.

The legal action represents the latest chapter in New York’s broader effort to tighten oversight of gambling and prediction market platforms.

Over the past two years, Governor Hochul and Attorney General James have taken several steps aimed at strengthening enforcement of the state’s gambling laws. The Attorney General has issued multiple warnings to both consumers and businesses about the risks associated with unauthorized gambling platforms while encouraging companies to comply with New York regulations.

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Earlier this year, in April 2026, Attorney General James filed lawsuits against Coinbase and Gemini, alleging the companies operated illegal gambling platforms. During the same month, Governor Hochul signed an Executive Order prohibiting state employees from engaging in insider trading through prediction market platforms such as Kalshi.

Enforcement efforts also extended into the gaming industry at the beginning of 2026, when Attorney General James sued video game developer Valve over allegations that it illegally promoted gambling through games popular with children and teenagers.

The state had already taken direct action against Kalshi before filing the current lawsuit. In October 2025, the New York State Gaming Commission issued a cease-and-desist order directing the company to stop operating what regulators described as an unlicensed mobile sports wagering platform.

Meanwhile, another enforcement initiative in June 2025 resulted in the shutdown of 26 online sweepstakes casinos that allegedly offered slot machines, table games, and sports betting using virtual coins that could later be exchanged for cash or prizes.

State officials continue to encourage residents to verify that any gambling platform they use is properly registered with the New York State Gaming Commission. The Attorney General’s Office also urges consumers who suspect gaming fraud or misconduct to report it through its online complaint system, which accepts anonymous submissions, or by calling its consumer assistance hotline.

The lawsuit will be handled by members of the Office of the Attorney General’s Investor Protection Bureau, supported by investigators, legal staff, and data specialists as New York seeks to prevent what it describes as an unlicensed gambling operation from continuing to do business within the state.