New York sues Kalshi, deeming it an 'illegal gambling operation'
The state of New York has filed a lawsuit against major prediction market platform Kalshi. In a statement published by the office of New York Attorney General (NYAG) Letitia James, it was announced that Kalshi has been sued “for running an illegal gambling operation in New York through its prediction market platform”.
New York Attorney General’s office details reasoning behind Kalshi lawsuit
The NYAG stated that, through an investigation, Kalshi’s prediction market was deemed to be “an illegal, unlicensed gambling operation”.
It stated that the aim of the lawsuit is to seek a court order which would stop Kalshi from operating as an unlicensed gambling business in New York. Additionally, the NYAG’s lawsuit is also asking the court to “order Kalshi to forfeit all illegal gains, distribute restitution to consumers who were harmed, and pay fines equal to three times the gains the company made through its illegal actions”.
Prediction markets in the United States, including Kalshi, are available to users aged 18 to 20, whereas New York law requires individuals to be at least 21 to participate in mobile sports betting.
The Commodity Futures Trading Commission (CFTC) and Kalshi have made attempts throughout 2026 to oppose New York’s attempts to enforce state gambling regulations against prediction markets.
On 8 July, U.S. District Judge Analisa Torres rejected a request by Kalshi to prevent New York from enforcing its gambling laws. Torres denied Kalshi’s request for a preliminary injunction and ruled that the Federal Commodity Exchange Act does not override New York’s gambling statutes in the case of Kalshi’s event contracts.
This decision may potentially serve as a notable precedent in favour of the NYAG’s latest legal action against Kalshi, but how things progress from here remains to be seen. The CFTC and the federal government have largely favoured allowing prediction markets to operate independently of state gambling regulations.
Statements by Governor Hochul and Attorney General James
In a statement regarding the lawsuit, New York State Governor Kathy Hochul remarked that “Kalshi has chosen to ignore New York’s gaming laws,” adding that “this choice has consequences”.
She continued that, in cooperation with Attorney General James, “New York is taking action to stop this illegal behaviour and bring Kalshi into compliance, because no company is above the law”.
Attorney General James remarked that prediction markets, despite presenting themselves as otherwise, “are gambling platforms, plain and simple”.
Further going into the details of the lawsuit, the NYAG stated that the lawsuit alleges that Kalshi’s prediction markets meet the legal definition of gambling due to the outcomes of the events on which users enter into event contracts being “uncertain and outside the control of the bettor or hinge on a game of chance”.
It noted that, despite this being the case, “Kalshi has failed to obtain a license from the New York State Gambling Commission, sidestepping its obligation to pay taxes like licensed casinos and mobile sports gambling platforms do”.
New York as a prediction market hub
New York has proven to be something of a key hub for prediction market operations in the United States. Kalshi and Polymarket, widely considered the biggest players in the space, both have their corporate headquarters in Manhattan, New York City.
One can hardly say that it is difficult to understand why New York would be so appealing to any business even remotely associated with technology or finance, let alone a business in a sector which has experienced such rapid growth and expansion as that of prediction markets.
Furthermore, NEXTPredict NYC 2026, set to take place in October, seeks to bring together stakeholders in the emerging sector to discuss the space, and New York’s selection as the host city lends credence to its status as a focal point for prediction market operations. It remains to be seen how these recent developments may change things.
SiGMA News has contacted NEXT for comment, but no reply was received by the time of publication.
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