New York State Seeks Billions from Prediction Market Kalshi, Demands Shutdown
New York is demanding at least $36 billion from Kalshi, urging a state court to shutter the prediction market and seize triple its earnings. Attorney General Letitia James filed the lawsuit Friday, alongside a motion for a temporary restraining order, characterizing the platform as an unlicensed gambling operation across eight charges. The filings state the damages figure is a minimum, pending a full accounting.
The charges range from violations of New York’s constitutional ban on gambling to bookmaking, possession of gambling records, unlicensed mobile sports wagering, and the federal Wire Act. The state is also seeking $100,000 for each offer of sports wagering, as well as restitution and disgorgement of profits.
“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,” stated New York Governor Kathy Hochul. She added that the state was taking action to halt its “illegal behavior” and compel the firm to comply.
Investigators conducted test bets, including four contracts on Connecticut to defeat Michigan in April, costing $1.14 including fees. The petition alleges that Kalshi permits 18-year-olds to open accounts, while New York’s legal age for gambling is 21. Furthermore, the platform offers markets on games involving New York college teams, a practice prohibited even for licensed operators.
Federal Agency’s Prior Action
The Commodity Futures Trading Commission (CFTC) had initiated action earlier. In April, it sued New York to assert federal law grants it exclusive authority over event contracts. On Thursday, the CFTC requested a restraining order in that case, barring the state from pursuing criminal or civil enforcement against Kalshi or any other CFTC-registered platform. New York filed its lawsuit the following day.
Kalshi’s Legal Struggles
Kalshi has largely faced setbacks in its legal battles. The company sued the New York State Gaming Commission in the Southern District last October. It was denied a preliminary injunction on July 7 and refused protection pending appeal on July 27. A Michigan judge issued a restraining order against Kalshi in June, and King County Superior Court in Washington granted a preliminary injunction on July 20. The company’s two notable victories include the Third Circuit, which upheld an injunction against New Jersey in April, and Minnesota, where a federal judge blocked the state’s ban on July 27.
The Minnesota ruling hinged on whether event contracts qualify as swaps under the Commodity Exchange Act. Judge Katherine Menendez determined that many do, singling out sports and pop-culture markets as contentious cases. New York’s lawsuit primarily targets sports-related markets.
Broader Regulatory Campaign
New York represents the latest front in a campaign that the Trump administration has pursued for months. The CFTC has sued Illinois, Arizona, and Connecticut over their attempts to regulate event contracts, added Wisconsin, and moved against Minnesota within hours of its ban becoming law. The President has publicly supported the agency, labeling state officials who oppose prediction markets as “SCUM.”
Kalshi’s own figures, cited in the petition, place its valuation at $22 billion and its annualized trading volume at $178 billion. In April, Attorney General James filed similar lawsuits against Coinbase and Gemini based on analogous legal theories.
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