New York sues Kalshi, alleging it enables illegal gambling

New York prosecutors have filed a lawsuit accusing the prediction market platform Kalshi of running an illegal gambling operation, marking the latest state-level challenge to such businesses. The complaint, filed by the office of New York Attorney General Letitia James, aims to stop Kalshi's activities within the state, compel restitution for users who placed bets, and force the company to forfeit profits and pay substantial fines.

Attorney General James stated that Kalshi exposes New York residents to significant financial and personal risks. The lawsuit also alleges that Kalshi allows individuals younger than the state's legal gambling age of 21 to participate. "New York's gambling laws protect children from underage betting and help combat gambling addiction," James said. "No matter what they call themselves, prediction markets like Kalshi are gambling platforms, plain and simple." Governor Kathy Hochul echoed these sentiments, accusing Kalshi of disregarding state gaming laws.

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New York's gambling laws protect children from underage betting and help combat gambling addiction. No matter what they call themselves, prediction markets like Kalshi are gambling platforms, plain and simple.

The popularity of prediction markets has surged, with global trading volume on platforms like Kalshi and Polymarket increasing dramatically since the 2024 U.S. presidential election. The Pew Research Center reported that combined monthly global trading volume rose from less than $5 billion in September 2025 to approximately $24 billion by April 2026. This volume significantly surpasses the average monthly bet placed on legal sports betting sites in the U.S.

Kalshi spokeswoman Elisabeth Diana criticized the lawsuit as "political theater," asserting that states cannot shut down a federally licensed exchange and that such actions would push New Yorkers to offshore platforms. This legal battle underscores a wider jurisdictional dispute between states and federal regulators. While states argue that prediction markets constitute illegal gambling, the Commodity Futures Trading Commission (CFTC), which oversees these markets, contends it has exclusive regulatory authority. The CFTC has initiated legal actions against several states, including New York, to prevent them from regulating these platforms. Recently, a federal judge temporarily blocked Minnesota from enforcing a ban on prediction market bets, following a CFTC lawsuit.

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It's sad to see this type of political theater from the leadership in our own state. States can't just shut down a federally licensed exchange. This would also hurt New Yorkers, who would be driven offshore. We love New York, we love New Yorkers, and New Yorkers love our product.