The lawsuit aims to prevent Kalshi from continuing what New York officials describe as an unlicensed gambling operation while seeking financial penalties and compensation.
New York has taken legal action against prediction-market platform Kalshi, alleging that the company provides sports and event-based wagering services in the state without holding the necessary gaming license.
The filing, submitted to the New York Supreme Court on Friday, asks a judge to block Kalshi from operating what the state considers an unauthorized gambling business. It also seeks details on customer wagers, losses, and company earnings, along with restitution, damages, and civil penalties.
A statement from Governor Kathy Hochul and Attorney General Letitia James said the state is pursuing a penalty worth three times Kalshi’s profits from the alleged activity, plus $100,000 for every unauthorized or attempted sports betting or mobile wagering offering.
James said New York’s gambling laws exist to protect minors and reduce gambling-related harm. She argued that prediction-market companies such as Kalshi are effectively gambling platforms regardless of the terminology they use.
Kalshi, which sought a valuation of $40 billion in a June funding round, is part of a broader prediction-market industry facing regulatory disputes across the U.S. The company recently received a temporary legal victory in Minnesota alongside rival Polymarket after a federal court ruled that the state’s prediction-market restrictions may conflict with the Commodity Exchange Act. The court granted a preliminary injunction blocking enforcement of the law against the companies and the Commodity Futures Trading Commission.
Kalshi’s communications chief Elisabeth Diana criticized New York’s lawsuit, describing it as political action against the company. She said states cannot shut down a federally licensed exchange and warned that such restrictions could push users toward foreign platforms. Diana added that Kalshi remains committed to serving customers in New York.
New York officials described Kalshi’s event contracts as wagers and said the platform offers markets linked to professional sports, college athletics, elections, and cultural events. The lawsuit claims Kalshi allows users aged 18 to 20 to place wagers and lists contracts involving New York college teams—activities that regulated sportsbooks in the state are prohibited from offering.
Kalshi saw significant growth during the World Cup, adding 3 million users during the tournament, according to CNBC. The increase pushed its reported user base above 5 million, more than double the 2 million users it had reported at the start of May.
The attorney general’s office said the lawsuit comes after the New York State Gaming Commission issued a cease-and-desist order against Kalshi in October.
A federal judge previously rejected Kalshi’s efforts to stop state regulators, denying the company’s request for relief on July 7 and later refusing an injunction pending appeal on July 27.
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