The state of New York has initiated legal action against Kalshi, asserting that the prediction-market platform is functioning as an unlicensed gambling operation.

The lawsuit seeks to prevent the company from conducting what the state describes as illegal betting activities and demands financial restitution.

By Olivier Acuna | Edited by Sheldon Reback Jul 31, 2026, 9:55 a.m. 2 min read

New York's lawsuit against Kalshi claims the company allows sports and event betting without the necessary gaming license.
  • New York State has filed a lawsuit against Kalshi, alleging the platform is conducting an unlicensed gambling business and aims to stop its operations in the state.
  • Attorney General Letitia James stated that Kalshi's event contracts constitute illegal betting on sports, elections, and cultural events, and the platform purportedly enables underage betting.
  • The lawsuit, lodged in the New York Supreme Court, requests that Kalshi be compelled to provide a full accounting of customer wagers, losses, and company profits, alongside seeking triple damages from the company's earnings, plus $100,000 for each unauthorized betting offer.

The lawsuit filed by New York claims that Kalshi is offering sports and event betting without the required gaming license.

The petition, submitted to the New York Supreme Court last Friday, requests a court order to prevent the company from continuing its alleged unlicensed gambling activities, along with a complete accounting of customer bets, losses, and company revenues, as well as restitution and civil penalties.

The state is pursuing a penalty amounting to three times Kalshi's profits from these activities, in addition to $100,000 for each unauthorized or attempted betting offer, as stated by Governor Kathy Hochul and Attorney General Letitia James.

Kalshi, which aimed for a valuation of $40 billion during a funding round in June, faces ongoing legal issues across the United States. Notably, in Minnesota, Kalshi and its competitor Polymarket achieved a temporary victory when a federal court deemed the state's ban on prediction markets likely violated the Commodity Exchange Act, granting a preliminary injunction against the law.

According to James' office, Kalshi's event contracts are essentially bets, with the platform allowing wagers on various events, including professional and college sports, elections, and cultural phenomena. The lawsuit also claims that Kalshi permits users aged 18 to 20 to place bets, which is prohibited for licensed sportsbooks in New York.

James emphasized, "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."

Kalshi's user base surged during the recent World Cup, reportedly adding 3 million new users, more than doubling its figure of 2 million at the beginning of May, according to CNBC.

This lawsuit follows an October cease-and-desist order issued by the New York State Gaming Commission.

A federal judge denied Kalshi's request to prevent state regulators from acting on July 7 and declined to grant an injunction pending appeal on July 27.

CoinDesk attempted to reach Kalshi for a statement outside of normal U.S. business hours but had not received a response by the time of publication.