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New York Attorney General Letitia James has sued Kalshi, accusing the prediction market company of operating an illegal gambling business in the state through its sports event contracts. The complaint, filed July 31 in New York state Supreme Court in Manhattan, seeks at least $36 billion and asks the court to halt Kalshi’s operations in New York.
The state alleges Kalshi let New Yorkers bet on sporting events without a license from the New York State Gaming Commission and without paying the taxes required of licensed sportsbooks. New York taxes licensed sportsbooks at 51% of gross gaming revenue.
James said, “Prediction markets like Kalshi are gambling platforms, plain and simple,” adding that “By ignoring our laws, Kalshi is running an illegal operation.”
What New York alleges in the case
According to the complaint, Kalshi allowed New York users as young as 18 to access its sports markets even though the state’s minimum age for casino and sports wagering is 21. New York is asking a judge to order forfeiture of gains from New York users, require restitution to bettors, and impose a separate $100,000 penalty for every unlicensed sports wager taken from a New York user.
The suit also says Kalshi never sought a state license. Kalshi launched in 2021 with contracts tied to elections, economic data, and other real-world events, then expanded into sports last year.
Governor Kathy Hochul said Kalshi “has chosen to ignore New York’s gaming laws” and that “no company is above the law.”
Kalshi and the CFTC push back
Kalshi called the New York case “political theater” and said it has been in talks with state officials about a possible partnership. The same day James filed suit, the Commodity Futures Trading Commission filed a federal lawsuit seeking to block New York’s case, creating a direct fight over whether Kalshi’s sports contracts should be treated as state-regulated gambling or federally regulated exchange products.
Kalshi is already suing the New York State Gaming Commission in federal court over a cease-and-desist order issued last fall. A federal judge denied Kalshi’s request for a preliminary injunction on July 7.
For New York players, the immediate question is whether Kalshi’s sports markets will remain available in the state while the cases move forward. That has not yet been resolved. Readers should also watch how courts handle the broader jurisdiction dispute between New York regulators and the CFTC, since that could shape how similar sports prediction markets are treated in New York and beyond.
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Source: As reported by northeasttimes.com.
