New York has filed a lawsuit against Kalshi, accusing it of operating illegal gambling products without a state license. Governor Kathy Hochul and Attorney General Leticia James allege that Kalshi’s event contracts on sports, elections, and economic data constitute unlicensed gambling under state law. The lawsuit seeks to block these products in New York and demands financial penalties, forfeiture of profits, and restitution for affected customers. Kalshi maintains its products are federally regulated derivatives overseen by the US CFTC, not gambling. This legal action is the latest development in an ongoing jurisdictional dispute over prediction markets.
New York has sued Kalshi, one of the most popular prediction market platforms, alleging it operates illegal gambling products without a state license. Governor Kathy Hochul and Attorney General Leticia James announced the lawsuit in a press release, stating that the complaint seeks to stop Kalshi from offering event contracts to New York residents and requests financial penalties, forfeiture of profits, and restitution for affected customers.
The lawsuit describes event contracts as instruments that allow users to trade on outcomes of sports matches, elections, economic data, and other real-world events. Officials argued that these products amount to unlicensed gambling under New York law.
State officials also argued that Kalshi permits users between the ages of 18 and 20 to participate, despite New York requiring bettors to be at least 21 years old. The platform claims its products are federally regulated derivatives overseen by the US CFTC, not gambling products subject to state gaming laws.
This lawsuit comes just weeks after a federal judge denied Kalshi’s request to block officials from enforcing its gambling laws while the broader case proceeds. The explosive growth of prediction market platforms Kalshi and Polymarket has drawn increasing attention from regulators.
The CFTC has repeatedly defended its authority over federally registered prediction markets, but New York officials argue that event contracts resemble traditional betting. The regulator even sued New York, claiming that federal law preempts state attempts to oversee these products.
New York also sued prediction market businesses operated by Coinbase and Gemini recently, arguing that they offered the same illegal gambling services without proper authorization. Meanwhile, Kalshi and Polymarket continue to face backlash outside the US, including bans in jurisdictions such as Argentina, Spain, Brazil, and Indonesia.
