(WRGB) — Two weeks after a federal court cleared the way for New York to enforce its gambling regulations against online prediction market Kalshi, the state filed a lawsuit against the company. In an announcement early Friday morning, Governor Kathy Hochul and Attorney General Letitia James said Kalshi is running an illegal, unlicensed gambling operation.

“By ignoring our laws, Kalshi is running an illegal operation and harming New Yorkers in the process,” said Attorney General Letitia James.

Kalshi allows users to bet on the outcome of events ranging from politics & the economy to culture & sports. The company, however, argues it operates in a manner different to traditional online sportsbooks, which New York State has been regulating since 2022.

“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,” Governor Hochul said. “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’s lawsuit argues Kalshi’s prediction market does fit the legal definition of gambling, “because the outcomes of the events on which its users are betting are uncertain and outside the control of the bettor or hinge on a game of chance.” Kalshi is not licensed by the New York State Gaming Commission and has not sought a license. The license would require Kalshi to pay taxes. Gambling tax revenue is used for things like sports programs, public schools, and even addressing gambling addiction.

Fact Check Team: Is Kalshi really gambling? States challenge prediction market

New York State requires anyone participating in mobile sports betting be at least 21 years of age; Kalshi is open to users as young as 18.

The state’s lawsuit seeks the forfeiture of all of Kalshi’s “illegal” gains and restitution for consumers, as well as fines three times the amount of gain.

Gambling platform misconduct or gaming fraud can be reported to the Attorney General’s Office online or by calling 1-800-771-7755. Reports can be made anonymously.