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New York Sues Prediction Market Kalshi, Alleges Illegal Gambling Operation
New York Attorney General Letitia James has filed a lawsuit against the prediction market platform KalshiEX, LLC, accusing the company of operating an illegal, unlicensed gambling business. The suit, filed Friday in a Manhattan state court, seeks to halt the company's operations in the state and require it to pay fines and restitution.
Details of the Lawsuit
The lawsuit alleges that Kalshi’s prediction markets, which allow users to bet on the outcomes of a wide range of future events, meet the state's legal definition of gambling. According to the complaint, the outcomes are uncertain and outside the control of the participants, which legally constitutes a game of chance.
The attorney general's office is seeking a court order to impose significant financial repercussions. The specific remedies requested include:
- An order stopping Kalshi from operating as an unlicensed gambling business.
- Forfeiture of all illegal gains.
- Restitution for consumers who were harmed.
- Fines equal to three times the gains the company made through its alleged illegal actions.
Regulatory and Tax Allegations
AdA central claim in the suit is that Kalshi failed to obtain the required license from the New York State Gaming Commission. By operating without a license, the company allegedly avoided paying state taxes that licensed casinos and mobile sports betting platforms contribute to public funds for schools, youth sports, and problem gambling treatment programs.
The suit also highlights that Kalshi's platform is accessible to users between the ages of 18 and 20. This is in direct conflict with New York law, which requires participants in mobile sports betting to be at least 21 years old.
Background of the Dispute
Kalshi launched in 2021 and expanded in 2025 by introducing sports-related "trading," which it claimed offered legal sports betting markets in all 50 states. This legal action follows a prior warning from state regulators.
In October 2025, the Gaming Commission issued a cease and desist order demanding that Kalshi stop operating what it deemed an unlicensed mobile sports wagering platform. The lawsuit represents a major escalation in the state's efforts to regulate the platform's activities.
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