New York has filed a lawsuit seeking to stop Kalshi from offering prediction markets in the state without a gambling licence.
Attorney General Letitia James alleges that Kalshi operates an illegal gambling business by allowing customers to trade contracts linked to uncertain outcomes including sports, elections and entertainment.
The case was filed in the New York State Supreme Court in Manhattan following an investigation by the Office of the Attorney General.
New York is seeking a permanent injunction preventing Kalshi from operating without approval from the New York State Gaming Commission. The state has also requested restitution, the forfeiture of alleged illegal gains and penalties of three times the amount earned through the disputed activity.
Additional penalties of US$100,000 could be imposed for each unauthorised offer of sports or mobile sports wagering.
Letitia James, attorney general of New York, said: “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.”
The lawsuit claims Kalshi has avoided the taxes and consumer protection requirements imposed on licensed casinos and online sportsbooks.
Kalshi permits customers aged 18 and over to use its platform, while New York requires mobile sports betting customers to be at least 21.
The company maintains that its event contracts are federally regulated financial derivatives and fall under the exclusive jurisdiction of the Commodity Futures Trading Commission rather than state gambling authorities.
The New York State Gaming Commission ordered Kalshi to stop offering sports event contracts without a licence in October 2025.
Kalshi subsequently sought a federal injunction preventing the state from enforcing its gambling laws. A Manhattan judge rejected the application on 7 July, ruling that the company had not demonstrated that federal commodities law superseded New York’s authority over its sports contracts.
Kalshi has appealed that decision.
