NY AG tells Kalshi: pick a number, double it, triple it, or just shut it down 🧮

New York Attorney General Letitia James filed a lawsuit on Friday seeking at least $36 billion from prediction market platform Kalshi, alleging the company operates an illegal, unlicensed gambling business in the state. The petition, filed alongside a motion for a temporary restraining order, lays out eight counts ranging from the New York Constitution's gambling ban to bookmaking, possession of gambling records, unlicensed mobile sports wagering and the federal Wire Act, and asks the court to shut Kalshi down and force it to forfeit three times whatever it has earned. The state is also seeking $100,000 for every offer of sports wagering, restitution and disgorgement, with figures described as a minimum pending a full accounting.

"No matter what they call themselves, prediction markets like Kalshi are gambling platforms, plain and simple," James said in Friday's statement. Governor Kathy Hochul added that "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," and said the state was moving to halt its "illegal behaviour" and bring the firm into compliance. Investigators said they placed test bets, including four contracts on Connecticut to beat Michigan in April for $1.14 including fees, and accused Kalshi of letting 18-year-olds open accounts, even though New York sets the gambling age floor at 21, and of offering markets on games involving New York college teams that even licensed operators are barred from touching.

The suit follows an October 2025 cease-and-desist order from the New York State Gaming Commission, which Kalshi responded to by suing the regulator in federal court. A judge denied Kalshi's request for a preliminary injunction on July 7 and an appeals court rejected its bid to block enforcement pending appeal on July 27. Kalshi did not immediately respond to a request for comment. The company has also faced setbacks in Michigan, where it was restrained in June, and Washington, where King County Superior Court granted the state a preliminary injunction on July 20, though it has secured wins in the Third Circuit against New Jersey in April and in Minnesota, where a federal judge blocked the state's ban on July 27. Minnesota's Judge Katherine Menendez found many event contracts qualify as swaps under the Commodity Exchange Act, singling out sports and pop-culture markets as more doubtful cases.

The legal battle is the latest flashpoint in a jurisdictional fight over whether event contracts listed by federally regulated platforms are subject to state gambling laws. The Commodity Futures Trading Commission (CFTC), which regulates Kalshi and other designated contract markets, sued New York in April to establish that federal law gives it sole authority over such contracts and on Thursday asked the court for a restraining order barring the state from pursuing criminal or civil enforcement against Kalshi or any other CFTC-registered platform. New York filed its case the next day regardless. The CFTC has taken similar positions in disputes with at least nine states, filing suits against Illinois, Arizona and Connecticut over attempts to police event contracts, adding Wisconsin, and moving against Minnesota within hours of its ban becoming law; President Donald Trump has publicly backed the agency, calling state officials who oppose prediction markets "SCUM."

Kalshi began expanding into blockchain-based infrastructure in December 2025, launching tokenized prediction markets on Solana and later adding support for multiple blockchain networks. The broader sector has grown alongside major sporting events, with blockchain-based prediction markets processing about $20 billion in trading tied to the 2026 FIFA World Cup, according to analytics firm Chainalysis, drawing more than 400,000 wallets. Kalshi's rival Polymarket has also faced regulatory action, with several countries restricting or investigating its operations over gambling and licensing concerns, and both platforms continue to attract mainstream attention as regulators and courts decide where their offerings fit in the law.