New York Attorney General Letitia James and Governor Kathy Hochul filed suit against prediction market platform KalshiEX, LLC on Friday, alleging the company has been operating an unlicensed gambling business in the state.
The lawsuit, filed in Manhattan state court, is seeking a permanent injunction against Kalshi’s operations, along with fines, restitution to users, and forfeiture of all profits
The state contends that Kalshi never obtained a gambling license from the New York State Gaming Commission or remitted the taxes that other licensed operators, including casinos and mobile sports betting platforms, are obligated to pay. On top of demanding forfeiture of profits, the state wants the court to award treble damages on all gambling proceeds and a $100,000 penalty for every customer solicitation — figures the attorney general’s office calculates add up to $36 billion, according to The Wall Street Journal. “No matter what they call themselves, prediction markets like Kalshi are gambling platforms, plain and simple,” Attorney General James said in a statement. “By ignoring our laws, Kalshi is running an illegal operation and harming New Yorkers in the process.” The suit further charges that Kalshi allows users as young as 18 to trade on its platform, even though New York requires participants in mobile sports betting to be at least 21. The state said that exposing younger users to online gambling raises risks of psychological distress and financial harm.
Kalshi called the suit “political theater.” “States can’t just shut down a federally licensed exchange,” a company spokesperson said. “We love New York, we love New Yorkers, and New Yorkers love our product.” Hours before the lawsuit was announced, the Commodity Futures Trading Commission — which asserts exclusive federal authority over prediction markets — moved in court to block New York from taking any enforcement action against Kalshi, according to CNBC. CFTC Chairman Michael Selig wrote on X that the agency…