New York sues prediction market Kalshi over alleged illegal gambling operation

New York has taken legal action against Kalshi, claiming the prediction market operates as an illegal gambling business. The lawsuit, filed by Attorney General Letitia James, alleges Kalshi violated state laws by accepting bets without a license from the state gaming commission. An investigation by the Office of the Attorney General found that the platform exposes New York residents to serious personal and financial risks, including individuals under the legal gambling age of 21. The state is asking the court to prevent Kalshi — which is headquartered in New York — from doing business in the state and to order restitution for customers who placed wagers on the platform.

New York joins Nevada, New Mexico, Arizona, Washington, and other states in suing Kalshi. Several states, including Wisconsin, Illinois, and Rhode Island, have attempted to introduce laws regulating Kalshi and other prediction markets like Polymarket, but these efforts have faced pushback from the federal government. The Commodity Futures Trading Commission (CFTC) maintains that it has exclusive jurisdiction over prediction markets, while many states argue that this authority does not extend to sports betting.

Kalshi’s head of communications, Elisabeth Diana, said in a statement that “it’s sad to see this type of political theater from the leadership in our own state,” adding that the lawsuit “would also hurt New Yorkers, who would be driven offshore.”

Beyond state gambling laws, Kalshi has also raised concerns about insider trading. Earlier this month, ABC News reported that President Donald Trump’s teleprompter operator made $100,000 placing bets on Kalshi related to Trump’s speeches.