The state of New York is taking legal action to halt the operations of the prediction market platform, Kalshi, which is accused of running an unlicensed gambling business. Attorney General Letitia James has initiated a lawsuit against Kalshi, seeking a court order to stop its activities within the state, along with demands for restitution, profit recovery, and financial penalties.
This lawsuit comes on the heels of recent court decisions that dismissed Kalshi’s efforts to prevent state enforcement while its federal case against New York's 2025 cease-and-desist order is still ongoing.
Governor Kathy Hochul stated that Kalshi is evading state regulations designed to protect consumers, curb problematic gambling, and ensure fair competition among businesses. She emphasized, “This choice has consequences, and working closely with Attorney General James, New York is taking action to stop this illegal behavior and bring Kalshi into compliance, because no company is above the law.”
Attorney General James contends that prediction markets fall under the category of gambling platforms as defined by New York law. She highlighted that these laws are crucial for safeguarding minors from underage gambling and addressing gambling addiction. “No matter what they call themselves, prediction markets like Kalshi are gambling platforms, plain and simple,” James asserted. “By ignoring our laws, Kalshi is running an illegal operation and harming New Yorkers in the process. We are taking them to court to uphold our laws and protect New Yorkers.”
In response, Elisabeth Diana, Kalshi's Head of Communications, criticized the state’s actions as political maneuvering, arguing that states cannot simply shut down a federally licensed exchange. She expressed concern that such actions would drive New Yorkers to unregulated offshore platforms, stating, “We love New York, we love New Yorkers, and New Yorkers love our product.”
The lawsuit, filed under Executive Law § 63(12), claims that Kalshi’s prediction markets fit the legal definition of gambling in New York, as users wager something of value on unpredictable events. It also alleges that Kalshi has been operating without the necessary licenses for sports wagering, violating various state laws, including the state Constitution and Penal Law.
Additionally, the complaint points out that Kalshi has allowed users aged 18 to 20 to engage in trading on its platform, despite New York law mandating that customers must be at least 21 years old to legally place mobile sports bets. The New York State Gaming Commission had previously issued a cease-and-desist order to Kalshi in October 2025, but instead of complying, the company opted to sue the state.
New York is requesting the court to issue both a temporary restraining order and a permanent injunction to prevent Kalshi from continuing its operations.