New York AG Sues Kalshi In State Court, Seeks $36 Billion In Damages

New York didn’t waste much time in suing Kalshi in state court.

New York Governor Kathy Hochul and Attorney General Letitia James announced early Friday morning that they filed suit against Kalshi for allegedly “running an illegal gambling operation in New York through its prediction market platform.”

The lawsuit came soon after the US Court of Appeals for the Second Circuit denied Kalshi’s request for an injunction in its federal case seeking to stop New York from taking action. That opened the door for the attorney general to sue Kalshi in state court in New York, where the company is headquartered.

The lawsuit was filed in the County of New York. The state is also seeking a temporary restraining order to immediately stop Kalshi from operating in New York.

The AG asked “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,” according to a press release that dropped early Friday morning. The state is seeking $36 billion in damages:

New York’s action marks a decided escalation in the battle between states and prediction markets, which argue that federal law supersedes state gambling laws.

Meanwhile, the Commodity Futures Trading Commission sought a temporary restraining order against New York in a separate federal lawsuit asserting its exclusive jurisdiction over prediction markets.

Excerpts from the AG’s announcement:

“An investigation by the Office of the Attorney General (OAG) found that Kalshi’s prediction market is an illegal, unlicensed gambling operation. Kalshi’s illegal prediction market exposes New Yorkers – including those under the legal gambling age of 21 – to serious personal and financial risk. The lawsuit is seeking a court order stopping Kalshi from operating as an unlicensed gambling business and requiring the company to pay fines, forfeit all illegal gains, and pay restitution to users.

“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.”

“New York’s gambling laws protect children from underage betting and help combat gambling addiction,” said Attorney General James. “No matter what they call themselves, prediction markets like Kalshi are gambling platforms, plain and simple. 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 lawsuit alleges that Kalshi’s prediction markets meet 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. Despite this, Kalshi has failed to obtain a license from the New York State Gaming Commission (Gaming Commission), sidestepping its obligation to pay taxes like licensed casinos and mobile sports gambling platforms do. This tax revenue from gambling regulation funds public schools, sports programs for underserved youth, and problem gambling education and treatment.

You can see the full lawsuit here.

A quick look at what matters most in prediction markets.

Novig Named Exclusive Official Prediction Market Partner of the New York Mets (press release): Beginning this season, Novig will be integrated across the Mets ecosystem through a comprehensive portfolio of in-ballpark, broadcast, digital and social activations. Fans will see Novig featured through prominent Citi Field signage, branded in-game moments, broadcast-visible branding and original digital content that introduce a new generation of sports fans to regulated prediction markets.

As Novig’s first partnership with a professional sports team, the agreement represents another milestone in the company’s rapid growth ahead of its nationwide launch next month as a federally regulated sports prediction market. Focused exclusively on sports, the platform combines the transparency and efficiency of financial markets with an experience designed around the way fans follow live sports.

“We’re proud to be the first Major League Baseball club to partner with a prediction market company, giving our fans a new and engaging way to connect with the game,” said Lew Sherr, President of Business Operations for the New York Mets. “Innovation is a defining characteristic of our business, and this partnership is another example of our commitment to staying at the forefront of the evolving sports landscape. It reflects our broader goal of delivering unique experiences for our fans and continuing to attract industry-leading partners who want to grow alongside the Mets.”

The partnership is the latest example of the Mets’ continued investment in innovative fan engagement initiatives and reflects the club’s ability to attract category-leading partners seeking to connect with one of baseball’s largest and most passionate fan bases.

“Our mission is to build the home for sports trading,” said Jacob Fortinsky, CEO and co-founder of Novig. “Partnering with one of baseball’s most iconic franchises allows us to bring that vision directly to fans in one of the greatest sports markets in the world. The Mets have consistently embraced innovation that enhances the fan experience and together, we’re introducing a new way for fans to engage with the game that is transparent, regulated and built on integrity.”

The partnership follows Novig’s recent designation as an MLB Authorized Prediction Market. The designation establishes participation in MLB’s integrity program, which includes collaboration on comprehensive market monitoring, reporting protocols, and restricting markets that present an integrity risk to MLB.

🔍 A few notes and thoughts:

More coverage and quotes from CEO Jacob Fortinsky at Front Office Sports.

If you had a bet on Kalshi or Polymarket getting the first deal with an MLB team, you lose. Of course, lots of companies that are now in prediction markets have deals with teams, including Robinhood, DraftKings and PrizePicks to name a few. But it’s still notable because NHL teams had been the only major US franchises to take this step with a company that is first and foremost a prediction market. Now add an MLB team to the list.

Maybe I missed it, but I had never seen the designation of “MLB Authorized Prediction Market” before. How does one get this designation, I wonder.

It’s at least slightly interesting timing, given all the legal concerns in New York, and because the Mets suck right now. (Sorry, I can’t help myself as a Phillies fan.)

As always, Twitter isn’t real life. But the Mets account apparently posted and deleted the announcement several times. And the one that stayed up has a lot of negative replies and quote tweets:

Several new polls have been released recently in key Senate races. There was some buzz Thursday over Michigan’s Senate seat, with a poll giving Abdul El-Sayed a huge lead in the Democratic primary. He was already a pretty big favorite in the race at prediction markets, but now he’s nearing 97% odds at Kalshi. (There’s been $6 million traded on this race alone.)

He is also favored to win in the general election:

El-Sayed was even raising money using a screenshot of Kalshi odds!

Chip in $5: secure.actblue.com/donate/q3abdul

1:47 PM · Jul 30, 2026 · 69.3K Views

126 Replies · 346 Reposts · 3.6K Likes

New self-certifications listed with the Commodity Futures Trading Commission:

Underdog: Listed a bunch of new sports contracts as it ramps up its own exchange.

Kalshi: Which cryptocurrency in a specified group will produce the highest or lowest return over a stated period.

“Why are you so disparaging of state regulators and state policymakers? There are all kinds of different situations and objectives that vary from state to state that involve enormous consequences. You’re making a policy-based argument that things come out badly when they fall within the purview of state regulators. I’m not sure I’m following that argument that all things are better when they come from the federal government.”

—Judge Eric Clay, in oral arguments for a case involving Kalshi, Tennessee and Ohio, per InGame. More below.

Trend line from Ticker Tracker:

Everything else important that happened in or was written about prediction markets.

CFTC Rule Proposal: In-House Market Makers Allowed, But They Can’t Take A Side (InGame): “In-house market makers — entities that share ownership with an exchange they trade on — can exist, but only if they act as “bona fide” market makers and do not take directional positions on one side or another, the Commodity Futures Trading Commission (CFTC) proposed Thursday. However, there appears to be ambiguity at this stage in how elements of that proposed rule would be enforced.”

“The potential rule came in a consultation on proposed rulemaking issued by the CFTC Thursday. The CFTC will seek comments for 60 days before making a decision on whether it will go into force.”

🤔 This seems pretty important, as seemingly some prediction markets were moving to a world where they attempt to do what the CFTC might rein in here.

Coinbase shares fall after crypto exchange posts disappointing second-quarter results (CNBC): “Coinbase shares dropped in extended trading on Thursday after the crypto platform posted a wider-than-expected loss for the second quarter, underscoring the continued troubles resulting from a deepening crypto winter despite its efforts to diversify revenue.”

According to Coinbase’s press release: “Prediction markets contracts and revenue more than doubled, growing 106% quarter-over-quarter and crossing $100 million in annualized revenue. A new crypto binaries experience launched late in the quarter drove 3x daily traders and 4x daily revenue vs. May’s daily average.”

Rush Street Interactive: prediction markets filing just contingency plan (SBC Americas): “Rush Street Interactive’s CEO confirmed Wednesday that the company applied for designated contract market (DCM) registration with the Commodity Futures Trading Commission (CFTC). Richard Schwartz told investors and analysts that they should not interpret that as anything more than a step to ensure that it can act nimbly and quickly in the future, should it choose to do so.”