New York Governor and AG Hit Kalshi With Lawsuit for Unlicensed Betting Operation

New York officials have moved against Kalshi, accusing the company of running an illegal gambling business through its prediction market platform.

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Governor Kathy Hochul and Attorney General Letitia James announced the lawsuit last Friday, saying Kalshi has ignored state gaming laws by offering wagers on sports, elections, and cultural events without a license.

The petition filed in New York Supreme Court argues that Kalshi’s contracts are “quintessentially wagering under the guise of event contracts” and expose residents, including those under 21, to financial and personal risks. 

Hochul stated, “Kalshi has chosen to ignore New York’s gaming laws, which exist to protect consumers, prevent problematic gambling, deliver funding for critical public services, and ensure that every company plays by the same rules.”

Attorney General James added, “No matter what they call themselves, prediction markets like Kalshi are gambling platforms, plain and simple.”

Allegations of illegal gambling and consumer risk

The lawsuit claims Kalshi’s platform meets the legal definition of gambling because users stake money on uncertain outcomes outside their control. Examples cited include wagers on NFL games, college basketball matchups, and even reality television contests. 

According to the petition, Kalshi has promoted its services as “legal in all 50 states” and advertised directly to New Yorkers, despite lacking authorization from the New York State Gaming Commission. 

The Attorney General’s office argues that by sidestepping licensing, Kalshi avoids paying taxes that fund public schools, youth sports programs, and gambling addiction treatment. 

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The suit also highlights that Kalshi allows users between 18 and 20 years old to participate, even though New York law sets the minimum age for mobile sports betting at 21. 

NY asking for permanent block to Kalshi’s operations

The petition outlines multiple violations, including breaches of the New York Constitution, Penal Law, Racing Law, and even the federal Wire Act.

Prosecutors say Kalshi knowingly advanced unlawful gambling activity, accepted more than $5,000 in wagers in a single day, and operated without a license. The state is asking the court to permanently block Kalshi from continuing operations in New York, order restitution to affected users, and impose penalties.

Among the demands are fines equal to three times the company’s illegal gains, which could reach up to $36 billion, and $100,000 for each unauthorized sports wagering offer. The Attorney General’s office also seeks a full accounting of bets placed and customer losses.

AG James continues crackdown on prediction markets and gambling platforms

The lawsuit against Kalshi follows a cease-and-desist order issued by the New York State Gaming Commission in 2025, which the company challenged in federal court. That challenge failed earlier this summer, clearing the way for state enforcement. 

This case is part of a wider push by New York leaders to enforce gambling laws. In recent years, Attorney General James has sued companies including Coinbase, Gemini, and Valve for promoting or running illegal gambling platforms. 

Governor Hochul has also signed executive orders banning state employees from using prediction markets for insider trading.

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