New York Governor Kathy Hochul and Attorney General Letitia James have filed a lawsuit against KalshiEX, LLC, alleging the company is operating an illegal online gambling business in New York through its prediction market platform.
According to the lawsuit, Kalshi launched in 2021, allowing users to wager money on the outcomes of future events. In 2025, the company expanded into sports “trading,” promoting what it described as legal sports betting markets available in all 50 states. The platform also allows users to place wagers on cultural events and elections.
The Office of the Attorney General alleges Kalshi’s prediction markets meet New York’s legal definition of gambling because users are betting on uncertain outcomes that are outside their control or depend on chance. Investigators say the company has been operating without a license from the New York State Gaming Commission.
“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.”
Attorney General James said the state’s gambling laws are designed to protect consumers, particularly minors, from the risks associated with gambling.
“No matter what they call themselves, prediction markets like Kalshi are gambling platforms, plain and simple,” James said. “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.”
State officials contend Kalshi has avoided licensing requirements and the taxes paid by licensed casinos and mobile sports betting operators. Those tax revenues support public schools, youth sports programs, and gambling addiction prevention and treatment initiatives.
The lawsuit also alleges Kalshi allows users between the ages of 18 and 20 to participate, despite New York law requiring individuals to be at least 21 years old to engage in mobile sports betting. State officials cited research linking youth gambling to psychological distress, financial hardship, and a greater risk of gambling-related problems later in life.
The state is asking the court to permanently stop Kalshi from operating in New York without a license. It is also seeking the forfeiture of the company’s alleged illegal profits, restitution for affected consumers, and financial penalties equal to three times the gains prosecutors say Kalshi earned through its unlawful activities.
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