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New York Attorney General Letitia James is asking a Manhattan court to shut down prediction market platform Kalshi and recover penalties, restitution and costs that state officials said could reach at least $36 billion.
The state alleges Kalshi is running an illegal gambling business in New York without a licence from the New York State Gaming Commission. The petition seeks a permanent injunction, full restitution to users, a $100,000 penalty for each attempt to offer sports wagering, and a penalty equal to three times the company’s alleged illegal gains.
New York says Kalshi’s contracts are illegal gambling
James argued Kalshi users are betting on outcomes they cannot control, including the Super Bowl winner and even entertainment events such as _Big Brother_. New York also alleges the platform’s election, culture and other event contracts violate state law.
In a statement reported by Reuters, James said, “No matter what they call themselves, prediction markets like Kalshi are gambling platforms, plain and simple.”
The state also tied the case to consumer protection concerns. James said the products can fuel problem gambling and objected to Kalshi allowing 18- to 20-year-olds to trade, below New York’s age minimum of 21 for mobile sports betting. Gov. Kathy Hochul said Kalshi ignored state gaming laws designed to protect consumers and fund public services.
Fight over who regulates prediction markets
The lawsuit is part of a broader clash between state gambling regulators and the U.S. Commodity Futures Trading Commission. The CFTC says it has exclusive oversight of prediction markets and has challenged state action in at least nine states.
Kalshi, which is based in New York City, moved to shift the case to Manhattan federal court after James filed in state court. The CFTC has also asked federal judges to merge New York’s case with its own and block the state from shutting down a CFTC-designated contract market.
Kalshi has already been fighting New York for months. It sued the state last October after receiving a cease-and-desist letter from the Gaming Commission. On July 8, U.S. District Judge Analisa Torres declined to block New York’s enforcement, citing the state’s interest in curbing gambling addiction and protecting sports integrity. A federal appeals court in Manhattan later rejected Kalshi’s bid to pause enforcement while that appeal proceeds.
What New York players should watch
For New York adults, the immediate issue is whether courts treat these contracts as federally regulated swaps or as gambling products subject to state law. The next key step is procedural: whether the case stays in Manhattan state court, moves to federal court, or is merged with the CFTC dispute.
The outcome could help determine whether sports-related and other event contracts remain available in New York through Kalshi. If you use any legal gambling product in the state, follow official regulator and court updates closely and gamble responsibly.
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Source: As reported by Freschia Gonzales.
