New York sues Kalshi, says its prediction markets are ‘illegal gambling’

What the report says

New York officials have sued prediction market platform Kalshi, accusing it of running an illegal, unlicensed gambling operation and seeking to stop its activities in the state. The case was filed Friday in Manhattan state court by Attorney General Letitia James, who said Kalshi did not obtain the state gaming licence required to offer its event-based trading products. The platform lets users place wagers tied to outcomes such as sports, elections and other events.

According to the filing, New York argues that these products amount to gambling because customers are betting on events they cannot control, and that the platform’s access for users as young as 18 increases the risk of problem gambling. James’s office is asking the court to order Kalshi to forfeit profits, pay restitution to affected consumers and face penalties equal to three times its gains. Governor Kathy Hochul backed the lawsuit, saying the state’s gaming rules are meant to protect consumers and public services.

The action is part of a wider fight between several states and prediction market operators over who has authority to regulate the fast-growing sector. Kalshi says it is federally licensed and that only the US Commodity Futures Trading Commission can oversee its business. The company has also described New York’s case as an attempt to shut it down nationwide.

Al Jazeera reports that the lawsuit comes amid a broader wave of state challenges involving Kalshi and similar firms, with several states already obtaining court orders restricting the company’s activities. The dispute highlights ongoing tension between state gambling laws and federal oversight of event contracts.