![](\"https:\/\/www.newsbeep.com\/us-ny\/wp-content\/uploads\/2026\/07\/abb199e100d43dbc7d53a78a5b9b312032-Letitia-James.rsquare.w400.jpg\")
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\n Photo: Will Waldron\/Albany Times Union\/Getty Images\n <\/p>\n
There are many things you can bet on at Kalshi<\/a> \u2014 the weather, the price of a barrel of oil \u2014 but one thing the prediction market\u2019s users could not gamble on was the possibility of New York attorney general Letitia James<\/a> suing them for running a gambling racket that allegedly violates state law. That\u2019s what happened on Friday just after midnight, when her office charged Kalshi for failing to get a license from the New York State Gaming Commission and \u201csidestepping its obligation to pay taxes\u201d<\/a> on wagers based on chance.<\/p>\n The stakes are high for Kalshi on this one. James is seeking $36 billion<\/a> in compensatory damages, which would include Kalshi returning funds to customers and paying a $100,000 civil penalty for each allegedly illegal bet offered in the state.<\/p>\n The petition in state court in Manhattan makes note that Kalshi allows 18-year-olds to wager on its app \u2014 where 80 percent<\/a> of all the money on the line involve sports betting. \u201cNew York\u2019s gambling laws protect children from underage betting and help combat gambling addiction,\u201d James said in a statement<\/a>. \u201cNo 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.\u201d Governor Kathy Hochul added in a statement that her office has been working closely with the attorney general on Kalshi, which has \u201cchosen to ignore New York\u2019s gaming laws.\u201d<\/p>\n New York is not alone in attempting to rein in Kalshi during its year of massive expansion amid the Commodity Futures Trading Commission\u2019s lax regulatory oversight. More than a dozen states have tried to block Kalshi<\/a> and similar prediction markets from offering sports betting in their jurisdictions. But James\u2019s lawsuit represents a significant threat to the company. The New York attorney general has long been a leader in checking the growth of newfangled financial companies, like her yearslong campaign to block crypto firms from illegal trading<\/a> in New York. In April, she filed a similar petition to block Coinbase and Gemini from offering event contracts she called \u201cquintessentially\u201d gambling.<\/p>\n In a statement<\/a> to New York, a representative for Kalshi said that the action was \u201cpolitical theater\u201d and that \u201cstates can\u2019t just shut down a federally licensed exchange.\u201d So far this year, however, four states have won court orders<\/a> blocking Kalshi from offering sports contracts, the majority of its business.<\/p>\n Sign Up for the Intelligencer\u00a0Newsletter<\/p>\n Daily news about the politics, business, and technology shaping our world.<\/p>\n Vox Media, LLC Terms and Privacy Notice<\/p>\n