Gov. Kathy Hochul and New York Attorney General Letitia James sued the prediction market company Kalshi on Friday, claiming the prediction market platform does not abide by state laws on illegal gambling.
The lawsuit claims Kalshi allows users to wager money on the outcomes of events including sports, elections and cultural events without obtaining approval from the New York State Gaming Commission.
Kalshi launched in 2021 as a platform where users could place money on the outcomes of future events. In 2025, the company expanded into sports “trading,” saying it offered legal sports betting markets available nationwide.
James’ office said an investigation found Kalshi’s platform meets the legal definition of gambling because users are betting on uncertain outcomes outside their control or events that depend on chance.
“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,” Hochul said in a statement. “This choice has consequences.”
James said prediction markets like Kalshi are gambling platforms that put New Yorkers at risk.
“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.”
The suit also alleges the platform preys on people under age 21 — despite New York law requiring users to be at least 21 to take part in mobile sports betting — and endangers people’s financial, emotional and physical health.
The attorney general filed similar petitions in April against Coinbase Financial Markets and Gemini Titan.
Kalshi pushed back against the lawsuit, calling it “political theater.”
“States can’t just shut down a federally licensed exchange,” the company said in a statement. “This would also hurt New Yorkers, who would be driven offshore. We love New York, we love New Yorkers, and New Yorkers love our product.”
Kalshi’s previously requested an injunction against the state to avoid being subjected to New York’s gambling laws, which U.S. District Judge Analisa Torres’ refused on July 8.
The lawsuit asks a court to block Kalshi from operating in New York as an unlicensed gambling business.
The state is also seeking the forfeiture of alleged illegal profits, restitution for affected users and financial penalties.