New York sues Kalshi, calling prediction platform an 'illegal gambling operation'

New York’s attorney general has filed a lawsuit against Kalshi, a New York-headquartered prediction market, alleging that the company is operating an illegal gambling business. According to the complaint, Kalshi lets users place wagers on events whose outcomes depend on chance or are otherwise uncertain and beyond the bettor’s control. That, the state argues, meets the legal definition of gambling. The platform, however, has not obtained a license from the New York State Gaming Commission, does not pay taxes the way casinos and traditional betting apps do, and has made its services available to people under 21.

Attorney General Letitia James said in a statement that, regardless of what such platforms call themselves, prediction markets like Kalshi are gambling sites. She said the company is harming New Yorkers by ignoring state gambling laws, which exist to protect minors and combat addiction. The lawsuit asks the court to order Kalshi to forfeit all illegal profits, pay restitution to affected consumers, and pay fines equal to three times its unlawful gains.

Kalshi has already faced similar legal challenges in Nevada and Arizona. Yet legal precedent is not entirely in New York’s favor: a US Circuit Court of Appeals judge overturned New Jersey’s attempt to ban Kalshi in April 2026. The Commodity Futures Trading Commission, which oversees prediction markets, strongly disagrees with New York’s action. CFTC Chairman Mike Selig wrote on X that the commission has already sued to stop New York’s move and will continue defending its jurisdiction.

The case also has political connections. Donald Trump Jr. has invested in another prediction platform, Polymarket, and serves as an advisor to Kalshi. Engadget has asked Kalshi for comment but has not yet received a response.