NEW YORK, New York — New York has sued prediction-market operator Kalshi, accusing the company of disguising an illegal sports-betting operation as a federally regulated financial exchange.
Attorney General Letitia James alleges Kalshi offers event contracts that function as wagers without obtaining a license from the New York State Gaming Commission. The complaint also says the company avoids taxes and consumer safeguards imposed on licensed sportsbooks while allowing users as young as 18 to participate, despite New York’s minimum sports-betting age of 21.
The state wants a court to block Kalshi from operating without a license, order restitution for users and require the company to surrender profits. Officials are also seeking substantial civil penalties, potentially including three times Kalshi’s gains.
Gov. Kathy Hochul said companies cannot ignore laws intended to address gambling addiction, protect consumers and fund public services.
Kalshi called the lawsuit “political theater,” arguing that states cannot shut down an exchange licensed and supervised by the Commodity Futures Trading Commission. The company maintains that its users trade federally regulated contracts rather than place conventional bets.
The dispute is part of a growing national battle over whether prediction markets fall exclusively under federal commodities law or remain subject to state gambling regulations. Courts have issued conflicting decisions, making eventual Supreme Court review increasingly plausible.
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