New York sued the prediction market platform Kalshi for $36 billion on Friday, accusing it of illegally operating a gambling operation and exposing young New Yorkers to a potential addiction.
The state attorney general’s office, in Manhattan Supreme Court papers filed after midnight, asked the court to stop Kalshi from offering contracts for sports and other topics without a gambling license from the New York State Gaming Commission.
The suit seeks forfeiture of all Kalshi’s gains and restitution to users and an order finding the company has repeatedly and persistently broken the law, including by hosting bettors as young as 18.
“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,” Gov. Hochul said in a statement.
Kalshi has exploded in popularity since its 2021 launch. It prompts users to stake “Yes” or “No” positions on whether something will happen, be it a news event, sports match result, election result, pop culture development, or virtually any outcome. Examples in the suit include: “Will more Americans get vaccinated this week than last week?”
Critics say the model is a hotbed for insider trading-style corruption. A U.S. soldier who was involved in the capture of Venezuelan leader Nicolás Maduro in January faces federal charges in Manhattan alleging he pocketed $400,000 on Polymarket by betting the ousted president would be out of office within weeks of the seizure he helped execute.
Rather than a gambling venue, Kalshi has marketed itself as a democratized financial exchange that provides everyday folk a chance to get rich like traders on Wall Street.
“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,” AG Tish James said in a statement.
Reached for comment, Kalshi’s communications chief pushed back on the allegations.
“It’s sad to see this type of political theater from the leadership in our own state. States can’t just shut down a federally licensed exchange. 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,” Elisabeth Diana said.
The Trump administration has backed sites like Kalshi, where President Trump’s eldest son, Don Jr., was brought on as a strategic advisor in January 2025. As Friday’s suit was filed, the Commodity Futures Trading Commission, a regulatory agency meant to curb corruption in the U.S. market, filed a temporary restraining order seeking to halt enforcement action.
The federal agency’s Trump-appointed chairman, Mike Selig, criticized the AG in a post on X.
“Rather than seek reasoned answers from the courts, Letitia James and New York seek to force an unprecedented sudden shutdown of prediction markets nationwide,” Selig wrote, adding the CFTC would defend its jurisdiction.
In an email, Kalshi’s press office accused New York authorities of trying to “please the casinos” and said it was “hilarious” that the AG wanted restitution for users who have profited $200 million.
Friday’s suit notes that Kalshi values itself at $22 billion with an annual transaction volume of $178 billion.
The monumental profits have come at the expense of exposing 18-to-24-year-olds to serious gambling addictions, a population deemed high risk by the state Office of Addiction Services and Supports, the lawsuit alleges. It notes that as of 2022, mobile sports betting had far surpassed casino gambling as the primary reason New Yorkers made gambling-related helpline calls.
The complaint cites studies showing gambling disorders can lead to suicide and have a devastating impact on household financial health.
Legalized sports betting has even been found to increase rates of intimate partner violence, the lawsuit details.
“It is these types of harms that the New York Constitution and gambling laws were intended to prevent in New York,” the complaint reads.
The suit is the latest development in an effort by multiple states to clamp down on online betting and an escalation of the company’s standoff with New York.
A Manhattan judge this month rejected a demand for an injunction brought by Kalshi in a suit last year after getting a cease-and-desist letter from New York’s gaming commission.
Friday’s suit also asks that Kalshi be penalized $100,000 each time it offers sports wagering without authorization and demands a tally of total bets placed, monies lost by customers, and the company’s gains.