Published July 31, 2026 at 10:48 AM EDT

New York State has filed a lawsuit alleging the parent company of Kalshi, through its prediction market platform, is running an illegal gambling operation in the state.

Governor Kathy Hochul and State Attorney General Letitia James announced the lawsuit early Friday morning.

“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,” said Hochul in a prepared statement. “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.”

The state argues that because outcomes of events on which Kalshi users are betting are uncertain and beyond the control of the bettor, it amounts to gambling, and as such Kalshi has failed to obtain a proper New York State Gaming Commission license.
Additionally, Kalshi is available to users as young as 18 years old. In New York State, the minimum legal age to gamble is 21.

“New York’s gambling laws protect children from underage betting and help combat gambling addiction. No matter what they call themselves, prediction markets like Kalshi are gambling platforms, plain and simple,” said James in a prepared statement. “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.”

The state is asking the court to order Kalshi to forfeit all illegal gains, distribute restitution to consumers who were harmed, and pay fines equal to three times the gains the company made through its illegal actions.

Kalshi launched in 2021 as a service that allowed users to bet money on the outcome of a wide range of future events. In 2025, Kalshi launched sports “trading,” claiming it offered legal sports betting markets. The company took in an estimated $40 billion in wagers from the 2026 FIFA World Cup alone, while insisting it’s not a "sportsbook.”